Preamble

The House met at half-past Two o'clock

PRAYERS

[Mr. SPEAKER in the Chair]

PRIVATE BUSINESS

CROYDON CORPORATION BILL (By Order)

Second Reading deferred till Wednesday, at Seven o'clock.

LEEDS CORPORATION BILL (By Order)

Second Reading deferred till Monday next.

MANCHESTER SHIP CANAL BILL (By Order)

Second Reading deferred till Wednesday, at Seven o'clock.

Oral Answers to Questions — COAL

Pneumoconiosis

Mr. Ellis Smith: asked the Minister of Fuel and Power (1) what consideration he has given to the figures revealed in the Digest of Pneumoconiosis Statistics, 1954; and what action is to be taken;
(2) if his attention has been directed to the figures for North Staffordshire contained in the Digest of Pneumoconiosis Statistics, 1954; and what action is to be taken.

Mr. Swingler: asked the Minister of Fuel and Power (1) what research is at present being undertaken to establish the causes of the high incidence of pneumoconiosis amongst miners in North Staffordshire;
(2) if he will take special action to investigate the causes of, and provide treatment for, pneumoconiosis in North Staffordshire, in view of the figures published in the Digest of Pneumoconiosis Statistics, 1954.

The Minister of Fuel and Power (Mr. Aubrey Jones): As I told the hon. Member for Stoke-on-Trent, Central (Dr. Stross) on 6th February, the increase in the number of cases of pneumoconiosis now being diagnosed among coal miners would appear to reflect an increased awareness of the disease rather than an increased incidence. Since the fundamental cause of the disease is dust, strenuous efforts are being made to reduce the amount of dust in coal mines. Furthermore, to determine what quantities and types of dust are most injurious, a detailed examination is being made into the conditions of work and the health of the workmen in a number of representative pits, including North Staffordshire.
I am writing to the hon. Members in greater detail on this difficult subject.

Mr. Ellis Smith: Will the Minister bear in mind that we are now armed with a


letter from the North Staffordshire area of the National Union of Mineworkers urging that the matter should be treated as one of extreme urgency? The letter states that the area suffers a higher incidence of pneumoconiosis than any other in the country, and that the number of men there certified as suffering from the disease is higher than anywhere else. In view of that, will the right hon. Gentleman consult the Minister of Health and the Minister of Labour with a view to setting up as soon as possible a treatment, welfare, rehabilitation and research centre to cater for the growing need?

Mr. Jones: I am not satisfied that we know the full reason why the incidence of the disease would appear to be higher in North Staffordshire than elsewhere. I am looking into this as a matter of urgency, and as part of that I will certainly consider the hon. Member's suggestion.

Mr. Swingler: As the figures for North Staffordshire are particularly grave and disturbing, cannot some immediate action be taken to institute research? Would it not be possible for the Minister to agree at once to establish a research centre such as exists in some other coal fields so that immediate investigations can be made into the cause of the tremendous rise in the figures?

Mr. Jones: So far as my knowledge of the subject goes, the research is general to the whole country. Whether there is a case for establishing specific research in any one area is another matter, but I will certainly have that considered.

Mrs. Slater: As the National Union of Mineworkers is so very concerned as a result of the latest figures published, and as workers in the pottery industry in North Staffordshire also suffer from the disease, does not the Minister agree that there is a double argument for a research survey to be undertaken? Cannot he give us a more definite answer than he has done about the possibility of research being undertaken in North Staffordshire?

Mr. Jones: I have, of course, no jurisdiction over the pottery industry, but I assure the hon. Lady that I am looking with the utmost urgency into the reasons why the disease would appear to be graver in North Staffordshire than elsewhere.

Subsidence

Mr. Swingler: asked the Minister of Fuel and Power what consideration he has given to the views put to him on 19th January by a deputation of hon. Members and representatives of local authorities on the subject of mining subsidence.

Mr. Aubrey Jones: I shall shortly lay before the House an Order to amend the limit of rateable value in the 1950 Act, and I hope soon to be in a position to make a statement about the wider issue of the Turner Report.

Mr. Swingler: Does the Minister appreciate—I am sure he does—that the citizens and Members from mining areas are highly impatient about the failure to apply more widely the recommendations of the Turner Report? Will he do the best he can to speed up his statement, and may we hope that his statement will be that he will introduce a comprehensive scheme of compensation?

Mr. Jones: I appreciate the concern in this matter, but I would remind the hon. Gentleman that I have been in office only six weeks and the Turner Report has been out for five years.

Mr. W. R. Williams: Is the Minister aware that in my constituency it is almost impossible to do anything further in connection with housing because of the need to deal with mining subsidence? When are we likely to get something done in the matter?

Mr. Jones: May I say once again that I appreciate the general concern over the problem, and I give the firmest assurance that I will endeavour to give my conclusions as speedily as possible.

Imports and Prices

Mr. A. Roberts: asked the Minister of Fuel and Power if he will give an estimate of the price of domestic coal if no loss were incurred on imported coal.

Mr. Aubrey Jones: If supplies of our own coal were sufficient to meet demand so that no imports were needed, the price to the consumer would be about 2s. 6d. per ton lower than it is.

Mr. Roberts: Does not the Minister agree that this is an imposition on domestic consumers? Why should domestic consumers subsidise industrial consumers?

Mr. Jones: I cannot agree that it is an imposition. Consumers have to pay for the import of coal anyhow, and so far as this matter is concerned there is no distinction between industrial coal and house coal. My figure of 2s. 6d. applies to all coal.

Mr. Osborne: How soon are we likely to be in a position not to require imported coal?

Mr. G. Brown: Under this Government?

Mr. Osborne: Under this or any Govvernment.

Mr. Jones: I would inform my hon. Friend that imports in 1956 are likely to be far less than in 1955.

Mines Inspectorate

Mr. Neal: asked the Minister of Fuel and Power how many vacancies there are in the Mines Inspectorate; and what plans he has to encourage recruitment.

Mr. Aubrey Jones: There are 39 vacancies, excluding the specialist grades. I hope that it will soon be possible to offer greatly improved salary scales for the Inspectorate and to hold a further competition for appointments at an early date.

Mr. Neal: Is the Minister aware that that answer is somewhat reassuring, because this is the most overworked and under-paid profession connected with the mining industry? When he is reviewing the salaries of the Inspectorate, will he seek to make them comparable with those of men in similar employment in the service of the Coal Board?

Mr. Jones: I freely acknowledge the gravity of this problem, and I hope the hon. Gentleman will take my official answer as a token of my concern. I appreciate the need for some comparability between National Coal Board salaries and Inspectorate salaries.

National Coal Board

Mr. Neal: asked the Minister of Fuel and Power what pension rights attach to members of the National Coal Board; the amounts of benefit; and what age is fixed for retirement.

Mr. Aubrey Jones: Members of the National Coal Board are eligible for pensions on terms broadly similar to those of the staff pension scheme of the industry. There is no fixed age for retirement.

Mr. Neal: Why does the Minister equivocate about this? Can he not state the amounts paid in pensions? Can he say whether the same terms apply to the divisional boards as apply to the National Coal Board? Is he aware that although there is no retiring age in respect of the National Coal Board miners have been dismissed at 65 years of age?

Mr. Jones: I cannot indicate the amounts of pension because they vary according to the different lengths of service. So far as I am aware, the principles are the same both for the occupants of divisional board posts and occupants of posts on the National Board.

Mr. Osborne: Can my right hon. Friend confirm the statement which has just been made, that miners are being dismissed at 65 years of age? If so, how many? Are they coal-face workers?

Mr. Jones: I was not aware of that fact.

Mr. Neal: Would it interest the Minister to know that miners are being dismissed when they are over 65 years of age? Quite recently, in my constituency, a man of 66—a good, hard worker, who wanted to continue at work and who had four sons working at the same colliery—was dismissed.

Mr. Jones: I was not aware of that, but hon. Members opposite, a few moments ago, were unanimous in asking that I should not intervene unduly in the affairs of the National Coal Board. I should have to consider this matter most carefully before intervening in it.

Mr. A. Roberts: asked the Minister of Fuel and Power if he is satisfied with the progress made as a result of the implementation of the Fleck Report on matters which are the responsibility of his Department; and if he will make a statement.

Mr. Aubrey Jones: The reconstitution of the National Coal Board on the lines suggested by the Fleck Committee has been completed, and the Government are


considering the recommendations of both the Fleck and Herbert Committees about the salaries of Board members.

Mr. Roberts: Can the Minister tell us if there will be any possibility of debating these Reports in the House?

Mr. Jones: That question should be addressed to the Lord Privy Seal.

Prices and Grading (Bradford Experiment)

Mr. McLeavy: asked the Minister of Fuel and Power whether he has yet reviewed the Bradford experiment which provides for the inspectors of weights and measures to act as enforcement officers in respect to price and grading of coal; and if he will make an early statement to the House upon this experiment, and consider applying this method of public safeguard throughout the country.

Mr. Aubrey Jones: I have under review the Bradford experiment and a similar one made in Glasgow, and I would be ready to consider similar arrangements elsewhere should circumstances warrant it.

Mr. McLeavy: Is the Minister aware of the tremendous success of the experimental scheme at Bradford, as a matter of protection of the community? Would it not be in the public interest for the scheme to be applied throughout the country as soon as possible? Will the Minister be good enough to look into the matter personally and consider whether it would be possible to make an early statement to the House?

Mr. Jones: Yes, Sir, but circumstances vary from place to place, and success in one place does not necessarily guarantee success in another. For the rest, certainly where circumstances are appropriate I am quite prepared to consider the extension of the experiment.

Output Requirements

Mr. D. Price: asked the Minister of Fuel and Power to what extent the increased use of oil and later of nuclear energy will make it unnecessary to plan for a higher level of coal output in the future than at present being won.

Mr. Aubrey Jones: Not only is an early increase in coal output of vital importance, but if the growing energy requirements of the country are to be met, for

as long ahead as we can see we shall continue to need considerably more coal than we are now getting. There is grave risk that without this extra coal the rate of economic advance which we have known since the war would be slowed down. It is for this reason that, as announced on 17th February last by the Chancellor of the Exchequer, there will be a higher level of investment in coal production in 1956 than in 1955, even though some reduction has had to be made in other parts of the National Coal Board's general programme.

Mr. Price: Will my right hon. Friend give the greatest publicity to his reply so as to place beyond any doubt the fact that the coal industry has a great future, and to disabuse certain organs of the Press and certain sections of public opinion of the idea that it is dying?

Mr. Jones: I should certainly like the widest possible publicity given to the Answer which I have just made. I strongly deprecate any impression that the coal industry is dying or is one without any future. It has a great future, and I hope that if we can give it such a future, we can improve upon present performance.

Production Requirements

Mr. Shinwell: asked the Minister of Fuel and Power if he will give a general direction to the National Coal Board requiring it to use more fully its powers under Section 1 (2) (d) of the Coal Industry Nationalisation Act, which enables it to produce any of its requirements in the production of coal.

Mr. Aubrey Jones: No, Sir. I see no reason to interfere with the commercial judgment of the Board in this matter.

Mr. Shinwell: Does the Minister not agree that these powers are vested in the National Coal Board? It has a power not only to produce coal but to distribute it, and also to provide all the apparatus for the purpose of production and distribution, including the production of mining machinery, conveyor belting and all its other requirements. If that is so, why should not it use those powers?

Mr. Jones: The National Coal Board already performs functions beyond the mere production of coal. Whether its functions, upon the Statute as it now


stands, should extend to the distribution of coal—as I gathered the right hon. Gentleman to suggest—is another matter, and, I should have thought, one of great legal disputation.

By-Products

Mr. Shinwell: asked the Minister of Fuel and Power whether he will give a general direction to the boards of the nationalised industries under his control to co-ordinate their activities in the development of by-products in order to create a by-product industry in those areas where it is necessary to offset the danger of unemployment resulting from pits being worked out.

Mr. Aubrey Jones: I see no reason for giving such a general direction on the grounds suggested by the right hon. Member.

Mr. Shinwell: Why should not these nationalised industries be fully utilised, not only as regards their primary products but all their requirements—in particular, the manufacture of an extensive range of by-products? The gas industry produces them; the coal industry produces them, and the electricity industry can generate steam heat and the like. Why should their activities not be co-ordinated, more especially in view of the danger, which is apparent—especially in the County of Durham—of unemployment?

Mr. Jones: I attach the greatest importance to the fullest development of the byproducts industry, but I am satisfied that the co-ordination which is now being effected between the boards under the Statutes is sufficient. I certainly see no reason to fear unemployment in particular districts because, even though pits may close in one area, the demand for miners is so great that any affected miners ought quite easily to be absorbed elsewhere.

Oral Answers to Questions — GAS AND ELECTRICITY

Faulty Apparatus (Warning Notices)

Mrs. L. Jeger: asked the Minister of Fuel and Power if he will introduce legislation to confer power on gas and electricity boards to enable them to cut off supplies in cases where written danger warnings of faulty apparatus have been ignored by consumers and life is thereby endangered.

Mr. Aubrey Jones: Electricity boards already have this power, and the question whether it could usefully be conferred on gas boards is among those which I am considering with the Gas Council in my general examination of what I feel to be the serious and growing problem of gas poisoning accidents.

Mrs. Jeger: Has the attention of the Minister been called to a report in the News Chronicle of 8th February of an inquest on a constituent of mine who, unfortunately, lost his life because the landlady had neglected two danger warnings from the gas board, warnings of which the tenant himself was unaware? Will the right hon. Gentleman consider urgently the necessity of preventing similar fatalities?

Mr. Jones: I have seen the report in question, and I am treating this as a serious and urgent problem. Whether that consideration will lead to quite the measures the hon. Lady has in mind is, of course, another matter.

Pensioners

Dame Irene Ward: asked the Minister of Fuel and Power (1) on how many occasions the powers granted under Section 58 (1) of the Gas Act, 1948, for the Minister to make regulations to provide pensions to persons who arc, or have been, in the employment of an area board or the Gas Council have been exercised by himself or his predecessors:
(2) on how many occasions the powers granted under Section 54 (1) of the Electricity Act, 1947, for the Minister to make regulations or joint regulations to provide pensions to persons who are, or have been, in the employment of an electricity board have been exercised by himself or his predecessors.

Mr. Aubrey Jones: On five occasions under the Gas Act, and on four under the Electricity Act. With permission, I will circulate a list in the OFFICIAL REPORT.

Dame Irene Ward: s: In view of the fact that my right hon. Friend has now found that he has powers under the Electricity and Gas Acts, may I ask whether he will adopt the same procedure as his colleague the Minister of Transport and Civil Aviation and consult the chairmen


of nationalised boards about the possibility of doing something for the pensioners of these boards in order to implement the pledge given by the Prime Minister at Bradford to help small income groups?

Mr. Jones: There are differences of forms between pension arrangements

LIST OF REGULATIONS ISSUED BY THE MINISTER UNDER THE RELEVANT SECTIONS OF THE ELECTRICITY AND GAS ACTS


—
Regulations


Electricity
Gas


1. Electricity (Pension Scheme) Regulations, 1948
S.I. 1948 No. 226
S.I. 1949 No. 744


Gas (Pension Scheme) Regulations, 1949


To authorise any Electricity Board, the Gas Area Boards or the Gas Council to establish any pension scheme approved by the Minister.




2. Electricity (Pension Rights) Regulations, 1948
S.I. 1948 No. 2172
S.I. 1950 No. 1206


Gas (Pension Rights) Regulations, 1950


To make supplementary provisions necessary with regard to certain of the pension rights which under the Electricity and Gas Acts took effect against the Electricity Boards, Gas Area Boards or the Gas Council on the vesting dates.




3. Electricity (Pension) (Amendment) Regulations, 1950
S.I. 1950 No. 359
S.I. 1950 No. 742


Gas (Pension Scheme) (Amendment) Regulations, 1950


To amend the Pension (Scheme) Regulations so as to provide in certain cases for the inclusion of whole-time Board or Council members in Pension Schemes, and to make minor amendments to the Electricity (Pension Rights) Regulations.




4. Gas (Pension Rights) (Amendment) Regulations, 1951
—
S.I. 1951 No. 383


To provide for modification of the Gas (Pension Rights) Regulations, 1950 in regard to existing co-partnership rights and obligations.




5. Electricity (Pension Rights) (Particular Scheme) Regulations, 1951
S.I. 1951 No. 1079
—


To make special provision in regard to two individual schemes already covered by the Electricity (Pension Rights) Regulations.




6. Gas (Pension) (Amendment) Regulations, 1953
—
S.I. 1953 No. 1525


To:—




(a) amend the Gas (Pension Scheme) Regulations so as to authorise Gas Area Boards or the Gas Council to participate in any pension scheme other than those established or maintained by the Boards or Council; and




(b) amend the Gas (Pension Rights) Regulations so as to enable members of certain schemes on changing employment from the Board or the Council to another Board or the Council to transfer to a scheme established by the other Board or Council.

Mr. Palmer: asked the Minister of Fuel and Power when the supplementation of the pensions of ex-company pensioners in the electricity supply industry will be implemented.

Mr. Aubrey Jones: On the suggestion of my Department, the Central Electricity Authority is considering possible improvements in the proposals originally submitted by the Authority. The in-

under the Transport Act and pension arrangements under the Gas and Electricity Acts, but, whatever those differences of form may be, they do not mean that I do not consult the boards on pension arrangements.

Following is the list:

creases will take effect as soon as I have received and approved the new proposals.

Wage Claims

Mr. Gresham Cooke: asked the Minister of Fuel and Power if he will issue a general direction to the Central Electricity Authority to consult local electricity boards before conceding wage claims.

Mr. Aubrey Jones: No, Sir. Under the Electricity Act, 1947, it is for the Central Electricity Authority and appropriate organisations of workers to establish and maintain machinery for settling terms and conditions of employment. The Authority has in practice consulted with the area boards in this matter, as the Statute requires it to do, and the negotiating machinery established in consequence ensures that the employer's side of the appropriate joint council includes representatives of the areas as well as of the Central Authority.

Mr. Gresham Cooke: Has my right hon. Friend seen the letter from Mr. Randall, Chairman of the London Electricity Board, alleging that local electricity boards are not consulted; that the Central Electricity Authority is one of the ring leaders in the inflationary spiral, and that the wages situation would be much more under control if local electricity boards were consulted?

Mr. Jones: I have seen the correspondence in The Times, and, following that correspondence, I invited Mr. Randall to see me. I asked him the specific question whether or not he thought there was some defect in the existing wage negotiation machinery. He conveyed to me his view that there was no defect. For my part, I accepted that assurance, and I indicated to him my severest displeasure that he should have in the first instance indicated his views in the correspondence columns of The Times rather than directly to me. Further, I cannot but deprecate that differences of views between two appointees of mine should be ventilated in the Press rather than in other ways.

Mr. G. Brown: Will the Minister accept that we on this side support him entirely in the reply he made to Mr. Randall; and will he remind his hon. Friends that any interference in joint negotiating machinery at this time is bound to create the utmost difficulty in industrial relations?

Mr. Jones: I would say to the right hon. Gentleman that the relationship of a Minister with a nationalised undertaking is certainly a rather intangible and delicate one. But one thing I am perfectly certain about, and that is that a

Minister ought not, without the gravest possible cause, to interfere in wage negotiations; and he ought not to endeavour to influence a nationalised undertaking either to concessions or to resistance.

Mr. Speaker: rose—

Dame Irene Ward: On a point of order, Mr. Speaker. Would it not be possible to say something on Mr. Randall's behalf? [HON. MEMBERS: "No."] It is generally accepted in this House that if someone has a rather strong statement made against him, something should be said for him.

Mr. Speaker: I thought the Question had been completely exhausted. If the hon. Lady has another point to put, I think she ought to put down another Question.

Generation (Wind Power)

Mr. Neal: asked the Minister of Fuel and Power what experiments in the generation of electricity by windmill are now continuing under the sponsorship of, or in co-operation with, his Department; and if he will make a statement on their progress.

Mr. Aubrey Jones: My Department is sponsoring a programme of research which the Electrical Research Association is carrying out at its Cranfield station, into the possibilities of generating electricity by windpower on a commercial scale. The Department has also been contributing towards the cost of testing two large experimental windmills in other parts of the country.

Mr. Neal: Has the right hon. Gentleman had sufficient time to form an opinion whether this experiment has been financially worth while? Has it developed to such a stage that we might offer it as a going concern to those of our overseas territories which are without natural fuel resources?

Mr. Jones: I think that the experiment has been going sufficiently long to enable one to conclude that its likely contribution towards coal economy is small—no more than between 2 million and 5 million tons of coal a year.

London Electricity Board (Chairmanship)

The following Question stood upon the Order Paper:

Mr. NABARRO: To ask the Minister of Fuel and Power what action he proposes to take consequent upon the resignation of the Chairman of the London Electricity Board; and whether he will make a statement.

Mr. Speaker: Mr. Nabarro.

Hon. Members: Where is he?

Air Commodore Harvey: On a point of order. This is one of the few occasions on which the hon. Member for Kidderminster (Mr. Nabarro) is not in his place. As Question No. 17 has a bearing upon your Ruling a short time ago, Mr. Speaker, would it not be possible for my right hon. Friend to answer it?

Mr. Speaker: I could not allow that. There will be a Written Answer. We had better see what it is.

Capital Expenditure

Lieut.-Colonel Lipton: asked the Minister of Fuel and Power what reductions will be made in the capital expenditure of the Central Electricity Authority for 1956–57.

Mr. Aubrey Jones: The original capital programme for 1956–57 has been reduced by £19 million.

Lieut.-Colonel Lipton: Can we have separate figures, please? Bearing in mind that there are still rows of privately-owned houses in Brixton which are still waiting for electric light, how much of this £19 million cut is being borne by the London Electricity Board?

Mr. Jones: I cannot give detailed figures for individual areas. Broadly, the cut falls about equally upon distribution and generation.

Mr. Callaghan: In view of the serious nature of the cuts announced last Friday in relation to all nationalised industries, and the consequential serious effect which this may have upon our other industries, will the Minister make a full statement at an early date giving more details of where these cuts will fall in the electricity, gas and coal industries?

Mr. Jones: If the hon. Gentleman will put down appropriate Questions to me, I shall be pleased to endeavour to enlighten him upon this matter as much as I can.

Rural Electrification

Mr. Vane: asked the Minister of Fuel and Power what effect the reductions he is making in the capital expenditure of the Central Electricity Authority in the year 1956–57 will have on the industry's rural electrification programme; and if he will make a statement.

Mr. Aubrey Jones: The number of farm connections in England and Wales in 1956–57 should not be far short of 12,000. This is the annual average required for the completion of the present five-year programme and compares with 12,500 in the original plan for 1956–57.

Mr. Vane: Will my right hon. Friend give the widest publicity to this very satisfactory reply? Is he aware that the people who live in the country and are waiting for electricity will be extremely pleased to hear it, particularly in view of many of the suggestions put about, somewhat irresponsibly, by area boards, and particularly the North-Western Electricity Board, that their plans for the extension of their mains in rural areas are likely to be severely cut back as a result of Government action? The suggestions are now shown to be completely false.

Mr. Jones: There has been great misapprehension on this matter, although it is not for me to say how this misapprehension has arisen.

Mr. Palmer: Remembering that the right hon. Gentleman's predecessor told this House that the Government were making special provision for rural electrification, are we to understand that they now stand by this undertaking?

Mr. Jones: The hon. Gentleman is merely continuing the misapprehension if he suggests that there is in any way a retreat. My predecessor elaborated a five-year programme, according to which 60,000 farms would be connected by 1958. That programme still stands, and there is no reason why it should be in any way affected by the cuts now made in the programme for 1956–57.

Mr. Callaghan: Does the right hon. Gentleman not realise that this misapprehension will continue to exist until we


get a detailed statement from the Government about what cuts are being made and in what connection? Is he aware that more than £20 million is being cut from the nationalised industries, exclusive of transport and fuel and power? Does he realise that we cannot wail until next week? Will he give us a verbal statement this week, saying where the cut affects us?

Mr. Jones: I should have been delighted to give the right hon. Gentleman the fullest and most detailed answer had an appropriate Question appeared on the Order Paper. In the absence of any such Question, I have said that the cut in electricity is of £19 million evenly shared between generation and distribution.

Commander Maitland: Is my right hon. Friend aware of the very considerable damage done by recent blizzards in the rural districts of Lincolnshire and Yorkshire? Can he give an undertaking that the amount of capital available for the extension will not be reduced by the enormous amount of maintenance or replacement work which has to be done?

Mr. Jones: I have already indicated that I cannot reply for individual areas. The distribution of the cut between areas is a commercial matter for the boards themselves.

Mr. Callaghan: Does not the right hon. Gentleman realise that we did not know until last Friday, when it was too late to put down a Question for today, the damage that was going to be done to the nationalised industries? Will he seek permission from the Leader of the House or from Mr. Speaker to give us a full statement this week of the serious nature of these cuts in the nationalised industries?

Mr. Jones: If the hon. Gentleman will put down a Question for a week today, I will endeavour to give him the fullest possible answer.

Oral Answers to Questions — MINISTRY OF SUPPLY

Aircraft Workers, Coventry (Employment)

Mr. Edelman: asked the Minister of Supply whether his attention has been drawn to the consequential redundancy in engineering workers which may result

at the Armstrong Whitworth works, Coventry, from a reduction in orders for Hunter aircraft; and what action he proposes in order to maintain the company's factories and skilled workers in full employment.

The Minister of Supply (Mr. Reginald Maudling): The small reduction in orders for Hunters, of which the parent firm has been notified, will not affect production at Messrs. Armstrong Whitworth at Coventry.

Mr. Edelman: While thanking the Minister for that reply, may I ask him, in view of the recession in the motor industry in places like Coventry, whether he will give an assurance to the workers at Messrs. Armstrong Whitworth's that the programme will be maintained during the next six months, at least, which will be critical in the motor industry?

Mr. Maudling: I cannot order more aircraft than the Services require. The redundancy that had been feared at Messrs. Armstrong Whitworth's in the early part of this year has, in fact, not materialised, because the firm themselves have been extremely active—and I am glad to say successful—in finding extra work and are hoping to get additional export orders.

W.D. Stores (Sales)

Mr. Dodds: asked the Minister of Supply in connection with the sale by auction at Bicester of hammers, screwdrivers, paint brushes, car batteries and fuse wire, which of these items were previously offered to other Government Departments and how this was done.

Mr. Maudling: All these items were previously offered to other buying Departments by the circulation, before the auction, of the catalogue of the goods for disposal. This is the standard practice.

Mr. Dodds: Is the right hon. Gentleman not aware that there is widespread concern at the ever-increasing sales of Government stocks at give-away prices, indicating waste and extravagance? Is it not about time there was a thorough inquiry into these activities?

Mr. Maudling: The rate of disposal of surplus at the present time is very much less than it was under the previous Administration. [HON. MEMBERS: "Oh."] Exactly. The point is that when


we are making a reduction in the size of the Armed Forces, such as the disbandment of Anti-Aircraft Command, naturally a certain amount of stock is thrown up as surplus.

Mr. G. Brown: Are we not a long way further from the war than we were under the previous Administration and that it is extremely likely, therefore, that there will be a good deal less stuff to dispose of? Will not the right hon. Gentleman apply his mind to the real problem? If this stuff is of use, is he satisfied that the turning of it down by other buying Departments is satisfactory? Should not the Government have an inquiry into how it comes about that other buying Departments can be ordering new supplies of the very stuff which they are refusing to buy from the right hon. Gentleman's Department?

Mr. Maudling: That is precisely what is not happening. They are not ordering other supplies of precisely the same stuff. My right hon. Friend the Secretary of State for War explained on 13th February about the paint brushes and the hammers. The batteries to which reference has been made had already exhausted their legitimate shelf life. The fuse wire was a special resistance type not useful for any civil purpose.

Major Beamish: Why does the right hon. Member for Belper (Mr. G. Brown) apparently think that hammers and screwdrivers are only used in war?

Mr. Beswick: Will the Minister of Supply tell us why these hammers and screwdrivers are not to be used in peace?

Mr. Maudling: My right hon. Friend the Secretary of State for War has already explained why he declared these articles surplus. If the size of the Forces is being reduced, the size of their requirements for all types of articles is also reduced.

Mr. Dodds: asked the Minister of Supply why 582 motor car tyres and 247 inner tubes were offered for sale by auction at the Royal Arsenal, Woolwich, on 14th February; what offers had been previously made to other Government Departments; how many were sold; how much they realised; and how this compares with the cost of purchase by his Department.

Mr. Maudling: The tyres, which were mostly synthetic retreads, and the tubes, were old stock for which no further use could be foreseen. Catalogues were sent to other buying Departments. Five hundred and forty-one tyres and 247 tubes were sold and realised £1,730. They were purchased more than ten years ago, and I am unable at this length of time to trace the original cost.

Mr. Dodds: Is the right hon. Gentleman aware that I went to that sale and saw these tyres? Is he really suggesting that the people who bought them are going to keep them as souvenirs of ten years ago, or are they going to sell them? Is he aware that some of the sizes were of popular type? Why cannot they be used in his or some other Government Department?

Mr. Maudling: There are plenty of uses for old tyres which I could suggest to the hon. Gentleman opposite. I do not think it would be right to equip our Forces, for example, with tyres more than ten years old.

Lieut.-Colonel Lipton: asked the Minister of Supply what loss was incurred in the sale by auction of surplus paint at Woolwich Arsenal last Thursday.

Mr. Maudling: The paint cost £26,046 and was sold for £13,400.

Lieut.-Colonel Lipton: Is the Minister aware that the firm bought back paint supplied to the Army only a year or two ago? Has not the right hon. Gentleman perhaps got a spare rocket available for the persons guilty of this really damnable waste?

Mr. Maudling: As I have said in reply to an earlier Question, when the size of Army units is run down their requirements are also reduced, and it is better to sell paint which is surplus to requirements than to let it run to waste.

Lieut.-Colonel Lipton: In view of the unsatisfactory nature of the reply I beg to give notice that I shall raise this question on the Adjournment.

Mr. Dodds: I beg to give notice that I shall raise with the Prime Minister the question of the need for an inquiry at an early date.

Ordnance Factory, Bishopton (Accident)

Mr. Maclay: asked the Minister of Supply if he will make a statement on the explosion which took place on Wednesday, 8th February at the Royal Ordnance Factory, Bishopton, Renfrewshire.

Mr. Maudling: The explosion occurred in a washing house in the nitro-glycerine section of the factory. I much regret that one man lost his life and that six other workers were injured, fortunately not seriously. A court of inquiry is now being held. I am sure the House would wish to join me in expressing sympathy with those who were injured and with the relatives of the man who was killed.

Mr. Maclay: While thanking the Minister for his reply and joining in the expression of sympathy, may I ask him if he appreciates how much distress and anxiety has been caused by this explosion at Bishopton, not only to those working there and their relatives and friends but to all those who live nearby? May I ask whether, after the inquiry has been completed, he will publish his reply or make a further statement?

Mr. Maudling: I will certainly consider this possibility. I am anxious to get to the bottom of the accident. One of my officials who visited the factory after the accident reported that the morale of the workers was extremely high, on which they are to be congratulated.

Bomber Aircraft (Development)

Mr. Beswick: asked the Minister of Supply on what evidence he bases his estimate that the period of nine years required to develop a large bomber in this country is not longer than the period taken by other nations.

Mr. Maudling: The hon. Member misquotes me. What I told the House on 7th February was that both here and in the United States it is about a ten-year job with a big bomber from the start of the design studies to the formation of the first operational unit. This was based on statements made to me by the authorities concerned when I visited the United States in December, and is confirmed by the reports received from time to time from the staff of my Ministry in the United States.

Mr. Beswick: The right hon. Gentleman is making his own case worse, because now he says ten years, whereas in the Adjournment debate he said nine years. Is it not a fact that in the case of the B.52, which is a not less complicated aircraft than any of our comparable medium bombers, the time taken from design to quantity production was six years, and according to all information the time taken for the Russian Bison was four years, which is even two years better? In view of that, does the right hon. Gentleman not think that there is even less cause for the complacency that he showed in the Adjournment debate?

Mr. Maudling: I have no reliable information about the Russian aircraft, but in the case of the B.52 the time taken was nine to ten years.

Oral Answers to Questions — AGRICULTURE, FISHERIES AND FOOD

Pigs (Subsidy)

Mr. Collins: asked the Minister of Agriculture, Fisheries and Food the average of the subsidy paid per pig during the period from the commencement of the current financial year to 26th January, 1956; and the average per pig during the financial year 1954–55.

The Minister of Agriculture, Fisheries and Food (Mr. D. Heathcoat Amory): During 1955–56 to 29th January, 1956, the subsidy per pig was approximately £4 18s. 2d. In 1954–55 it was £5 11s. 8d.

Mr. Collins: Is the Minister aware that although the taxpayer paid slightly less per pig in the second period the farmers received considerably less, while over the whole period housewives paid a good deal more for their bacon? Is not this a confirmation that the present pig policy is a complete and disastrous failure?

Mr. Amory: No, I do not at all agree with the hon. Gentleman. The average price that the farmer received this year has, of course, been lower than that received last year to the extent of the 2s. 6d. by which the guaranteed price was reduced.

Mr. Champion: Is the right hon. Gentleman aware that if he had a proper marketing scheme there would be a lesser


amount paid per pig, with more satisfaction for the farmer, for the taxpayer and for the consumer?

Mr. Amory: I agree with the hon. Gentleman to the extent that it is very important that we should have the best possible marketing scheme, which is why the Government appointed the Pig Marketing Reorganisation Commission to go into that precise question.

Mr. G. Jeger: Can the right hon. Gentleman explain why all farmers refer to his policy as the pig muddle?

Mr. Amory: There has never been any muddle on the part of Her Majesty's Government.

Ordnance Survey Map, Essex

Mr. B. Harrison: asked the Minister of Agriculture, Fisheries and Food when he expects the revision of the 1/2500 Ordnance Survey map of Essex to be completed; and what method is used to determine the correct names for watercourses.

Mr. Amory: About a quarter of the survey work has been completed and it is hoped that a further 25 per cent. will be done by 1960: but it is not yet possible to say when the work will be finished.
The names of watercourses which are not in any particular ownership are those used locally as ascertained from responsible persons of long residence in the neighbourhood or from societies or bodies of standing who are concerned with place names. The names of watercourses which are owned or administered by local authorities, nationalised industries or private persons are obtained from and vouched for by the owners or administrators.

Mr. Harrison: While thanking the Minister for that reply may I ask him if he would get his Department to look, in particular, into the naming of the two important rivers, the Chelmer and the Blackwater, at their mouths, because, according to the Ordnance Survey, they seem to change their names with every mile they go?

Mr. Amory: I will certainly go into that point with the Ordnance Survey Department.

Rabbits

Mr. A. Roberts: asked the Minister of Agriculture, Fisheries and Food his estimate of the amount the agriculture

industry will benefit in 1956 due to the absence of the attack of rabbits on food crops.

Mr. Amory: I am afraid that it is not possible to make such an estimate.

Mr. Roberts: Does not the Minister agree that quite a lot of nonsense is being talked about the so-called rabbit plague? In view of what he said last year about the £15 million by which the agricultural industry benefited, would he not recommend that some inducement be offered to attract recruits into the farming industry?

Mr. Amory: The hon. Gentleman has raised some very broad issues. There is a difference of opinion about this matter, but I would say that the figure to which he referred was not an estimate of mine of the total gain but only the estimated gain for cereal crops last year.

Mr. Nicholson: Is my right hon. Friend satisfied with the progress made in the elimination of rabbits? Is he aware that there are some rabbits almost all over England, and that unless more vigorous steps are taken the breeding season will begin without much reduction having been achieved?

Mr. Amory: I shall certainly never be "satisfied" with progress, but the job is being tackled with the greatest energy. I must say that I am pleased at the work that is being done under the auspices of county agricultural committees and by the occupiers themselves.

Mr. Champion: Can the right hon. Gentleman tell us how he intends to assess in his Price Review the saving which has accrued from the rabbits being eliminated?

Mr. Amory: Fortunately, that item does not have to be separated from other items in the Price Review. It is very difficult to estimate.

Seed Potatoes (Frost Protection)

Mr. Hurd: asked the Minister of Agriculture, Fisheries and Food, if, in view of the heavy wastage of seed potatoes on rail from Scotland to England in the recent hard weather, he will consult the British Transport Commission to ensure that measures are taken to protect such perishable produce from frost damage by adequate straw packing and sheeting of trucks.

Mr. Amory: My Department has been in touch with the British Transport Commission and I am assured that the Commission is doing all it can to help in the matter. Responsibility for the actual loading of wagons with seed potatoes, including adequate frost protection, rests with the consignors.

Mr. Hurd: Is it not the responsibility of British Railways to provide adequate sheeting? I think one can accept that it is the responsibility of the consignor to straw the potatoes but surely the overall cover should be provided by British Railways, and that responsibility is being avoided.

Mr. Amory: My information is that when covered wagons cannot be provided British Railways does provide sheets.

Warble Fly

Mr. Hurd: asked the Minister of Agriculture, Fisheries and Food what progress has been achieved in the past year towards the elimination of the warble fly; and to what extent the loss on damaged hides has been reduced.

Mr. Amory: Preliminary reports from my officers suggested that over a large part of the country the requirement to treat infested cattle was better observed last year, but the full effect will not be apparent until later in the year. The proportion of warbled hides in 1955 is estimated at 15·5 per cent. Compared with 23·5 per cent. in 1954. This improvement is encouraging but it may have been due partly to weather conditions.

Mr. Hurd: While thanking my right hon. Friend for that satisfactory reply, may I ask him if he can tell us anything about the Isle of Wight experiment to eliminate warble fly altogether, and whether he sees any prospect of applying that method to other areas?

Mr. Amory: I think that it will be very difficult to apply that particular method on the mainland.

Land Drainage Costs (Mining Subsidence)

Mr. Boardman: asked the Minister of Agriculture, Fisheries and Food whether he can give the average annual costs incurred by authorities responsible

for land drainage for work necessitated by mining subsidence.

Mr. Amory: No, Sir. I regret that the information is not readily obtainable.

Mr. Boardman: Can the Minister say whether he accepts the recommendations in the Turner Report in relation to these costs of land drainage?

Mr. Amory: That really is the responsibility of the Minister of Fuel and Power. I understand from my right hon. Friend that the problem of mining subsidence is at present under review by him, in consultation with the National Coal Board.

Oral Answers to Questions — MINISTRY OF HEALTH

Royal Northern Hospital (Maternity Department)

Mr. E. Fletcher: asked the Minister of Health (1) when the maternity department of the Royal Northern Hospital will be reopened;
(2) whether he has considered a letter from the Mayor of Islington protesting against the hardship that will be caused to the people of Islington if the maternity department of the Royal Northern Hospital is to be permanently closed; and what action he proposes to take in the matter.

Mr. A. Evans: asked the Minister of Health why the maternity department of the Royal Northern Hospital has been closed.

The Parliamentary Secretary to the Ministry of Health (Miss Patricia Hornsby-Smith): My right hon. Friend has carefully considered the whole matter, and he does not think it would be right to ask the regional board to reverse its decision not to re-open this unit, which was closed because of infection. It is not well adapted to its purpose; it could be used to greater advantage for other specialties; and there are enough maternity beds elsewhere in the area to meet all essential needs.

Mr. Fletcher: Is the hon. Lady aware that that announcement will create very great hardship in the Borough of Islington? Is she aware that, hitherto, there have been 750 maternity cases a year in this maternity department? The people


in Islington live in overcrowded accommodation and find it very difficult to have home confinements, and as a result of this decision many of them will have to travel long distances. Will the Minister be good enough to reconsider the matter in view of the representations which have been made?

Miss Hornsby-Smith: I think it is only fair to say that there are 250 other maternity beds in the immediate vicinity of the Royal Northern Hospital, and many more within two miles or so. Since the inception of the National Health Service, it has been held that on the average 50 per cent. of all confinements should take place in hospital, and nothing has been done by this Government to alter that estimate. In this area the figure has been as high as 90 per cent.—far and away above the figure necessary on medical or social grounds. Therefore, I do not think that with the many available maternity beds in the immediate vicinity, there will be cause for hardship.

Mr. A. Evans: Does the Minister agree that it would be helpful if regional hospital beds were to pay some attention to the customs of local communities? Is she not aware that a community may, from long usage, become used to a certain facility, and that apart from the purely organisational advantages of concentration there is the local community point of view to be taken into consideration?

Miss Hornsby-Smith: I think that the beds still available will provide ample facilities. In any case, these beds are not lost to the service. I think it must be left to the regional board concerned, if it deems best, to use these beds for another speciality.

Pneumoconiosis, North Staffordshire

Mrs. Slater: asked the Minister of Health (1) if, in view of the high incidence of pneumoconiosis in North Staffordshire, he will recommend the setting-up of a treatment centre in North Staffordshire;
(2) if his attention has been called to the incidence of pneumoconiosis amongst miners in North Staffordshire, as stated in the Digest of Pneumoconiosis Statistics for 1954; and what proposals are to be made for dealing with this problem.

Mr. Ellis Smith: asked the Minister of Health if, in view of the incidence of pneumoconiosis amongst miners and pottery workers in the City of Stoke-on-Trent and the surrounding areas, he will recommend the setting up of a treatment and health centre, with special attention for those who suffer from pneumoconiosis and similar industrial disease.

Miss Hornsby-Smith: I would refer the hon. Members to the answer given by my right hon. Friend the Minister of Fuel and Power on 6th February to the hon. Member for Stoke-on-Trent Central (Dr. Stross). I am advised that there are adequate facilities for treatment at hospitals in Stoke-on-Trent and Market Drayton and at out-patient clinics at Stoke-on-Trent and Newcastle-under-Lyme.

Mrs. Slater: Is the hon. Lady aware that there is grave concern in North Staffordshire at the figures which have recently been published in the Digest, and that the National Union of Mineworkers, the National Society of Pottery Workers and the Pottery Federation are concerned at the high incidence of pneumoconiosis? Is she also aware that they feel strongly that a treatment centre should be established in North Staffordshire, and that the National Union of Mineworkers has stated in a letter to my colleagues and myself that the miners in North Staffordshire should have the same treatment as those in South Wales?

Miss Hornsby-Smith: I would not like it to be thought that the treatment is not available, when, in fact, it is provided at the general hospitals in the area. The regional hospital board always has to decide whether specialities ought to be put into one centre or dealt with in the general hospitals. In this area in-patient treatment is available at Stanfield Sanatorium, the City General Hospital, the Bradwell Isolation Hospital, Stoke-on-Trent, and Cheshire Joint Sanatorium, Market Drayton; and there are out-patient clinics at Shelton, Stoke-on-Trent, and at Newcastle-under-Lyme. Certainly, no representations have been received by my right hon. Friend from the miners' or pottery trade unions.

Mr. Ellis Smith: In view of the serious concern which has been expressed in letters received from the miners' and pottery workers' unions, will the Parliamentary Secretary consult her right hon.


Friend with a view to considering the advisability of consulting the Minister of Labour and the Minister of Fuel and Power to decide what should be done about this serious problem?

Miss Hornsby-Smith: I know that my right hon. Friend will consider what the hon. Gentleman has said. The fact remains that facilities are available in these general hospitals. If hon. Members have knowledge of any cases where treatment is not readily available, we shall be only too happy to look into them.

Mr. J. Griffiths: Will the hon. Lady ask her right hon. Friend to consult the Minister of Fuel and Power and get him to realise that the availability of treatment will have a big effect on recruitment to the industries? In view of the great success of the pneumoconiosis unit at Llandough, Cardiff, will she do what she can to get a similar one established in the potteries?

Doctors, Flintshire (Travelling Expenses)

Mrs. White: asked the Minister of Health if he will give the names of the two Flintshire doctors who were recently censured for having drawn more than £3,000 each excess travelling expenses.

Miss Hornsby-Smith: No, Sir. It has been agreed with representatives of the professions that the names of people concerned in cases investigated by service committees of executive councils will not be published, except in the extreme case of the removal of a practitioner from the executive council's list.

Mrs. White: Does the hon. Lady not think that in a case of this magnitude the public is entitled to know the names of these doctors? Why should they shelter behind "Doctor A and Doctor B" in the report? In fairness to the other doctors in the area who may be suspected, the names in cases of this kind should be published.

Miss Hornsby-Smith: I appreciate the views of the hon. Lady, but there is a very real difficulty in that executive councils are not privileged, like courts of law. Thus when complaints are made, whether by practitioners against patients or by patients against doctors, there is

a risk that actions for libel might ultimately arise. There is not the same protection as there is in courts of law, and therefore the procedure is more difficult.

Mrs. White: Is the hon. Lady not aware that in this case an official was dismissed from his job and that his career has been affected for life? Surely there is a great disparity when an official is ruined for life and the doctors concerned escape by not having their names published.

Mr. Blenkinsop: Would the hon. Lady consider, if not necessarily publishing the evidence, about which I realise there is some difficulty, publishing the names as well, as the decision reached in a case of this sort, in view of the importance of enabling public opinion to make itself felt in such matters?

Miss Hornsby-Smith: The hon. Gentleman will realise that all these procedures were agreed with the professions at the inception of the National Health Service. Any radical departure from them would have to be discussed and agreed with the professions concerned.

Mr. H. Morrison: Why has a procedure been agreed with the professions whereby nothing can be done to publish the names of offenders? Will the hon. Lady give an undertaking that the matte' will be reopened with the professions? Is she not aware that when members of local authorities receive excess expense payments severe notice is taken and such matters become public? Why should members of local authorities be treated one way and doctors treated in another?

Miss Hornsby-Smith: I am sure my right hon. Friend will give full consideration to the views that have been expressed.

Mrs. White: In view of the unsatisfactory nature of the reply, I beg to give notice that I shall raise the matter on the Adjournment at the earliest opportunity.

Oral Answers to Questions — GOVERNMENT DEPARTMENTS (STATEMENTS)

Mr. Lewis: asked the Prime Minister if he is aware of the growing practice of various Departments of issuing official and semi-official statements confirming or denying matters which are


the subject of Parliamentary Questions and debates; and whether he will instruct Departments that these should not be issued pending being dealt with in the House.

The Prime Minister (Sir Anthony Eden): It is an accepted principle that while Parliament is in session important matters are announced by Ministers to Parliament. I am not aware of any growing practice that derogates from this principle. I could not accept the proposition that the presence of a Motion or Question on the Order Paper automatically makes it impossible for anything to be said outside on the same subject.

Mr. Lewis: While thanking the Prime Minister for the general tone of his reply, may I ask him whether he is aware that last Tuesday Questions were placed on the Order Paper by hon. Members on both sides of the House; on Wednesday evening the Treasury, to whom the Questions were addressed issued a public statement which was, in effect, an answer to the Questions; and yet on Thursday the Leader of the House stated that the Treasury was thinking of making a statement, which, in fact, it did make on the Friday; and by adopting that method the rights of hon. Members were abrogated as a result of the action of the Treasury? Will the right hon. Gentleman look into this matter if I give the actual details?

The Prime Minister: Yes, I will look into it. I thought the hon. Gentleman was on another hare, about something said by Foreign Office spokesmen, but since it is this one perhaps he will let me have the details.

Mr. H. Wilson: While we all understand the Prime Minister's unwillingness to make a general rule on this point, was it not a rather strange occurrence that there should be the statement of the Treasury spokesman about building licensing and import licensing, not only because these Questions were on the Order Paper, but because the Chancellor was about to make a statement to the House? Was not this an unusual procedure?

The Prime Minister: I will look into it. I was not conscious of what was behind the Question.

AIRCRAFT ACCIDENT, MALTA

Mr. de Freitas: (by Private Notice)asked the Secretary of State for Air whether he can make a statement about the aeroplane crash in Malta, causing the death of 45 airmen.

The Secretary of State for Air (Mr. Nigel Birch): On Saturday afternoon a York aircraft, operated by Scottish Air Lines, crashed shortly after take-off from Luqa airfield, in Malta. The aircraft was engaged on a troop-carrying flight from the Canal Zone. The civilian crew of five, and the 44 airmen and one soldier flying as passengers were killed.
A preliminary investigation is already in progress. Two senior officers from the Accidents Investigation Branch of the Ministry of Transport and Civil Aviation have flown to Malta to assist. My right hon. Friend the Secretary of State for the Colonies is recommending to the Governor of Malta that the inquiry should be held in public.
I am sure that the House will wish to join with me in expressing sympathy with the relatives of those who have lost their lives.

Mr. de Freitas: My right hon. and hon. Friends join with the Secretary of State in those expressions of sympathy. May I ask him how many aircraft similar to this York are still used for trooping, and whether he will make another statement as soon as he has anything to report?

Mr. Birch: I cannot give the exact figure. There are a certain number but not a very large number of other Yorks engaged on trooping. I will certainly make a further statement as soon as I can.

Air Commodore Harvey: Will my right hon. Friend say whether it is the intention to use York aircraft pending the result of the inquiry? Secondly, will he bear in mind that it is generally recognised among the technical people that York aircraft, fully laden, will not fly satisfactorily on three engines when taking off?

Mr. Birch: The record of the York has been well up to the records of the other aircraft. In the last two years, up


to the last crash, 100,000 passengers have been carried and only one has been injured, and that injury was due to a pilot's error.

Mr. Beswick: While, on this particular route, this aircraft is a safe aircraft, apart from the weight consideration, is it not nevertheless a fact that other and more up-to-date machines are available? Can the Secretary of State say why they are not used for this kind of operation?

Mr. Birch: I think the general principle is that the most up-to-date aircraft available is used, but, unfortunately, it is not only old aircraft which have accidents.

Mr. Beswick: Is it not a fact that other and more modern aircraft were available but that they were not chosen because this particular contractor offered a cheaper price?

Mr. Birch: This machine was doing a double task of carrying freight as well as passengers. It had freight on one side. It was the only aircraft available which could do the task.

Mr. G. M. Thomson: Is the Secretary of State aware that there appears to have been some delay in sending telegrams to the next-of-kin of some of the airmen killed in this crash? Is he aware that the parents of some of these airmen are my constituents and that they first read about this tragic affair in their Sunday newspapers? Will he look into that?

Mr. Birch: I have not heard of that, but I will certainly look into it.

Mr. de Freitas: When the Secretary of State makes a further statement will he please try to deal with the points which have been raised on the Floor of the House this afternoon?

Mr. Birch: Most certainly I will.

HER MAJESTY'S RETURN FROM NIGERIA

3.33 p.m.

The Prime Minister (Sir Anthony Eden): I beg to move,
That an humble Address be presented to Her Majesty, assuring Her Majesty, on the occasion of Her return from Her visit to Nigeria, of the loyal and affectionate welcome of this House to Her Majesty and His Royal Highness the Duke of Edinburgh.
It is a pleasant duty to invite the House to approve this Motion. It was in the reign of another Queen, Queen Victoria, that these wide territories of Nigeria, as they are now known, were first drawn together in a protectorate under British protection. In the interval of more than fifty years those territories have grown in population and in prosperity until they are now, in both respects, the most important of the dependent territories of Her Majesty.
I think that on an occasion like this the House should pay tribute to the many public servants who have literally given their lives in the service of Nigeria over these years and to the many health missionaries who have gone out to that country to fight the fell diseases which used to be so rampant there.
At the time of this visit, those diverse and disparate territories, as they are, with their different races and creeds, present something in the nature of a Commonwealth in miniature which the Queen and the Duke of Edinburgh have been visiting—in the North, at Kaduna, where the Moslem leaders gathered together, some of them travelling many days to be there to greet the Queen; in the West, where the university college, which gives guidance in so many matters to the whole territory, was visited by Her Majesty; and in the Eastern territories, perhaps the most live in enterprise, shall we say, of all three territories, where Her Majesty did that act of visiting the leper settlement, showing thereby her understanding sympathy with the unhappy people who suffer from that disease.
There is one other reason for which I think the House should welcome this occasion, in particular. I notice that in Lagos and in all the regional capitals which Her Majesty visited—all three of them—she received the duty of her loyal


subjects through elected assemblies modelled on the same basis as this Parliament at Westminster. That is something in which this country can take pride in this present day and age.
Finally, I am sure that the whole House would pay tribute to Her Majesty and His Royal Highness for the manner in which they at once impressed the people of Nigeria with both their sense of duty and their untiring interest in the daily life of their people. As we welcome them back here and offer our respectful greeting to Her Majesty on her return, so do we join with our fellow subjects in Nigeria in this greeting, and in that expression of our humble duty and our thanks for services so generously and nobly rendered.

3.39 p.m.

Mr. Hugh Gaitskell: On behalf of my right hon. and hon. Friends, I rise to support the Motion moved in such appropriate and eloquent terms by the Prime Minister.
Very shortly we shall embark on a major debate, in the course of which the clash of opinion will no doubt be expressed in fierce argument and heated controversy, but on this Motion for a humble Address to Her Majesty there is no disagreement between the parties. We all rejoice to see Her Majesty and the Duke of Edinburgh back again safe and sound after their arduous but inspiring tour of Nigeria.
The great value of visits by Her Majesty and other members of the Royal Family to the countries of the Commonwealth has, I think, for long been recognised. Indeed, as what was once a Colonial Empire becomes more and more a completely free association of independent self-governing nations, the importance of the Crown not merely as an emblem or a symbol but as a true source of unity becomes even greater. That source, however, would in time dry up if it were not possible for the peoples of the Commonwealth to see Her Majesty in person, as she is, a young and beautiful woman with immense charm and dignity and an obviously sincere care and concern for their welfare. It is this alone which gives life to what might otherwise be a dry constitutional device.
As the Prime Minister has said, the visit to Nigeria had special significance.

As the largest of the African Colonies, with a population of over 30 million, well advanced on the road to self-government, it will, we hope, shortly take its place as a fully independent member of the Commonwealth. Her Majesty's visit was peculiarly appropriate at this time in setting the seal, as it were, upon the constitutional changes already made and in helping to overcome the inevitable difficulties in the transition to self-government. By her presence, she will, I am quite sure. have strengthened still further the links of friendship between Nigeria and Britain and the rest of the Commonwealth, and, at the same time, will have helped to create a unity within the different regions of Nigeria.
All of us in Britain have been greatly moved by the wonderful response of the Nigerian people to the Royal visit, by the gay, colourful, enthusiastic and tumultous welcome which the Queen and her husband received wherever they went. If this is in part a reflection on the happy relations existing between the Nigerian people and ourselves, it is even more a spontaneous tribute by millions of Africans to Her Majesty's gracious and winning personality.
With loyalty and affection, we welcome Her Majesty and the Duke of Edinburgh home again after another memorable tour which has strengthened our free Commonwealth, and of which we hope and believe that they, too, will always have the happiest recollections.

3.42 p.m.

Mr. Clement Davies: I should like to join the Prime Minister in paying my own personal tribute to those fine people of Nigeria, whom I had the honour of visiting in the last few months of 1938 and the first few months of 1939. One was able then to see the great struggle which they were making towards improving their economic position, their health service and education. At that time—only at the beginning of 1939—there was a Colony the size of Cornwall, whereas there was a Protectorate four times the size of the British Isles. Since then, there has been the very great progress to which the Prime Minister has already referred.
Once again, we have the opportunity of expressing to Her Majesty and His Royal Highness our gratitude for the unrivalled service which they have rendered


to the whole Commonwealth. They have in the highest degree a sense of duty and devotion that not only excites and evokes our admiration, but is also an example to us all, for neither danger nor toil daunts them. What is more, in their pilgrimage they have borne witness to the brotherhood of man and the equality of all of us as members of the Commonwealth. Around them radiates friendliness, good will and happiness, which they arouse in all people, drawing unto themselves not only the affection of those whom they visit but the affection of the people throughout the whole Commonwealth.
We are glad to have this opportunity in this Parliament to record our sincere and heartfelt gratitude, and our indebtedness to these great missionaries of kindliness, understanding, tolerance, fellowship and peace.

3.44 p.m.

Mr. J. McGovern: I am taking the unusual course of associating myself completely with this welcome to Her Majesty the Queen and his Royal Highness the Duke of Edinburgh. I was privileged to be in Nigeria when Her Majesty and His Royal Highness came to Lagos, and I had the unusual privilege of seeing them and the population of Nigeria on many occasions. I think that the welcome given them was unprecedented in any part of the world. It is a fitting lesson to those who seek our destruction, but who cannot emulate our institutions.
With my wife, I was there on the day of the Queen's arrival, and from half-past six that morning there was a steady stream of people tramping along the streets, passing, I estimated, at the rate of 200 a minute towards Government House, where the Queen was destined to find a resting place. On that occasion, there was scarcely a man, woman or child who was not decorated in some way, with flags or with decorations, welcoming the Royal visitors. This was no official, manufactured affair, but was a deep welcome from a people who evidently loyally welcomed the opportunity of seeing one whom they recognised as Queen in their country.
I was also invited to the service at Lagos, at which the Duke of Edinburgh read the lesson and at which Her Majesty was also present. It was held at the Cathedral, and my wife and I attended at the invitation of the Bishop. Outside the

Cathedral there were tens of thousands of people, and the welcome given to the Queen was absolutely magnificent. I am quite sure that the basis of this tremendous reception lay in the fact that this country had given complete self-government to that part of the world.
I was in the Parliament House later, and saw six or seven Cabinet Ministers and many Members of Parliament. Indeed, when I entered the House, I was surprised to see that our former Clerk of the House was the Speaker in that Assembly. The House was discussing—of all things—teachers' salaries.
I also had the opportunity of going right up to Ibadan University, along the whole route traversed by Her Majesty, and I saw all the arrangements made for the inhabitants of every jungle village to give a welcome to the Queen. There is a deep-seated affection and loyalty in those people and a tremendous enthusiasm for this country and its democratic institutions.
Her Majesty and His Royal Highness carried out this tour with grace, charm and dignity, and I say this by way of personal explanation to those who remember that I used to take a different attitude towards Royalty. I say this to my hon. Friends. When I accepted Moral Rearmament, I completely changed that attitude and found that many of the old proletarian snobberies had gone. The result is that I trust that Her Majesty and His Royal Highness will have a long and happy life, and that the people of the various Colonies will have the opportunity of seeing them in many more visits.
I believe that the hope of mankind lies in touching the hearts of men and women by this peaceful persuasion, and that that is the way in which the world will be saved. I am delighted to have had the privilege of being in Nigeria at the time of the visit of Her Majesty and His Royal Highness.

3.50 p.m.

Mr. Emrys Hughes: I am sure that the whole House will be in agreement in welcoming back Her Majesty and the Duke of Edinburgh from their visit to Nigeria. We are glad to see that everybody who worked in connection with the visit has arrived safely back, and that not even the photographers were captured by cannibals or eaten by lions.
Many of us learned facts about Nigeria during the course of the tour which we did not know before. For example, I was surprised to learn that 90 per cent. of the people there are illiterate. Her Majesty and the Duke of Edinburgh certainly did a very great service in attending schools and showing that a great deal needs to be done in Nigeria in order to bring the education of the people up to a decent standard of civilisation.
I thoroughly agree, also, with what the Prime Minister said about the attention that was drawn to the need for improving the health services in Nigeria. When we remember that there are only 500 doctors for 30 million people, we realise what remains to be done in improving health services there. Only 1 million out of 5 million children go to school and only 20,000 to secondary school.

Mr. Martin Lindsay: On a point of order, Mr. Speaker. Is this speech in order?

Mr. Speaker: I am just wondering about that. The Motion is very wide, but its main object is the humble Address which has been proposed by the Prime Minister and supported by other hon. Members. I hope that we shall not extend the debate into a discussion of Nigerian policies.

Mr. Hughes: I was only trying to stress the important services that Her Majesty and the Duke of Edinburgh have rendered to the nation in drawing attention to these facts.
We can also express our gratitude to the Duke of Edinburgh, because I see from the report of the visit published in the Daily Herald—which is very patriotic on these occasions—that Nigerians will longer remember that the Duke was not too proud to crawl, sweating, into a coal mine to see how "the other half" works. I hope that the Minister of Fuel and Power will be able to use the services of the Duke in propaganda for recruiting people into the mines of this country.
There were, however, certain features of the tour which, I think, we might legitimately criticise. I believe that there was too much military display in the tour. I do not think that we were justified in sending Canberra bombers to Nigeria to show our support of, say, Moral Rearmament. Without wishing to anticipate the speech which the Chancellor of the Exchequer is-about to make, calling for a rigorous examination of national expenditure, may I say that I believe that this tour could have been conducted with greater dignity and greater impressiveness if less money had been spent upon it and some attention had been devoted to the great need for national economy.

Question put and agreed to, nemine contradicente.

Resolved,
That an humble Address be presented to Her Majesty, assuring Her Majesty, on the occasion of Her return from Her visit to Nigeria, of the loyal and affectionate welcome of this House to Her Majesty and His Royal Highness the Duke of Edinburgh.

To be presented by Privy Councillors or Members of Her Majesty's Household.

ECONOMIC SITUATION

3.54 p.m.

The Chancellor of the Exchequer (Mr. Harold Macmillan): I beg to move,
That this House affirms its confidence in the measures announced by Her Majesty's Government to deal with the economic situation.
The measures which I announced on Friday together with those taken by the monetary authorities on Thursday, constitute an attempt to deal with a malady the character of which is not, I think, in dispute. Whether these are the right cures or not will the subject of our debates today and tomorrow, but I think it would very much help to make our discussions useful and fruitful, if we could reach broad agreement at least on the nature of the disease. I must confess that to people of my generation, who have seen the ups and downs of our economic fortunes for more than thirty years, it is rather confusing to have to accommodate oneself to the present situation.
I remember those terrible years when, under successive Governments, both of the Right and of the Left, we were unable to break through the chains of an excessive deflation. Apart from the crisis of 1931, the balance of payments in those days was reasonably satisfactory; the reserves were built up, the value of money was generally stable, and the cost of living was as likely to fall as to rise. That was one side of the picture in those years, but a terrible price was paid in terms of human suffering.
The cost of living was at its lowest in the years 1930 to 1935, but they were the years when unemployment was at its peak. I asked the other day for a graph to be made of the level of unemployment, on the one hand, and of retail prices on the other, and I was astonished to see how closely their movements corresponded. The cost of living rose as unemployment fell and the cost of living fell as unemployment rose. Therefore, I am bound to say that I am rather astonished when I read of some of the ex cathedra statements of economists and commentators.

Mr. William Hamilton: The right hon. Gentleman should look behind him.

Mr. Macmillan: People go about with gloomy faces and say, "Oh, unemploy-

ment has fallen again." What they really mean is that there is far too high a pressure of demand for labour and that there are now more vacancies for men at the employment exchanges than there are men unemployed. Nevertheless, such phrases give one a jar. There is a great deal of talk about the need artificially to create unemployment. I for one will never be a party to that. [HON. MEMBERS: "Look at your own side."] This does not, of course, mean that full employment implies a complete rigidity in the structure. [HON. MEMBERS: "Ah."] We do not want to make a kind of caste system here.
Sir Stafford Cripps was well aware of this and of the need for flexibility and movement. Let me quote what he said in this House on 26th October, 1949:
It cannot be repeated too often that a planned full employment programme entails, as an essential part of the full employment guarantee, that though sufficient overall employment can be found to occupy everyone, no individual can be guaranteed continuance in his particular job or even in his particular trade. To insist upon the rigid maintenance of the present pattern of employment would be to destroy all hope of full employment."—[OFFICIAL REPORT. 26th October, 1949; Vol. 468, c. 1340–1.]
Lord Beveridge, in his book, "Full Employment in a Free Society," said that full employment could be defined as unemployment on the average of about 3 per cent., and other authorities have taken the same view.

Mr. Hamilton: Is that what the right hon. Gentleman wants?

Mr. Macmillan: Three per cent. may sound very little in statistics, but I feel that there are grave dangers in this form of presentation for, if it were once thought that in the need we have today—it is a pressing need—to cure the inflationary danger we were going to plunge back into a deflationary movement regardless of the effect upon the life of our industrial workers, we should fail—and deserve to fail. It is true that many of the younger Members of the House and the younger generation throughout the country cannot remember those days, but their fathers remember them.
I cannot forget the twenty-five years when I sat for a Tees-side constituency. I cannot forget those terrible times when some 17,000 out of 25,000 able-bodied men in my constituency walked the streets


looking for jobs. I cannot forget that every Government in turn—Conservative, Labour and Coalition—struggled apparently in vain with this problem. If it has now fallen to my lot to try to curtail and to keep in proper bounds a situation which has gone too far in the other direction, I can only find consolation in the knowledge that if the Government, the House of Commons and the country were to shrink from taking the necessary measures we might well see a renewal of that dreadful story of large scale unemployment and its accompanying human misery.
The inflationary disease has today made more progress than we can accept. We all know its symptoms. One of them is the fact that there are far too many jobs for the workers available. I must, of course, make an exception of Northern Ireland, where special steps are now being taken. Generally, however, that is true. That is not merely a symptom of inflation; it is a factor which itself damages the economy, for men are drawn away from the basic industries and from the exporting industries to those of less national value. As one result, the importation of coal last year cost us directly no less than £74 million. This in itself is an important element in our overall trade deficit.
The rise in incomes continues to outpace production, and if it continues it must lead to further increases in prices and so reduce the opportunities of selling our exports in a world which is becoming more and more competitive. But it is not necessary to go again over all the symptoms. There may be minor variations of view between the different consultants, according to their training or background, but, on the whole, the doctors seem to agree fairly well on the diagnosis. Indeed, judging from the Socialist Amendment, the Opposition doctors cannot even find words of their own for the purpose. I do not complain of plagiarism—I rather welcome it. Everyone knows that imitation is the sincerest form of flattery. Of course, the Opposition will argue that the difficulties which confront us for the moment are the result of Government mismanagement. [HON. MEMBERS: "Hear, hear."] I rather thought they would say that. Oppositions usually use this argument. I

have had a feeling that I may have done so myself.
But what the country judges by is the firmness and resolution by which Governments act in the face of trouble, whether they stand up to it or whether they run away from it. What the country wants to know is how dangerous these troubles are, what their true character is, and how they can best be dealt with. First, let me say how dangerous they are. I would say again, bearing in mind the tragic years to which I have referred, that I would rather have to face a boom than a slump.
We have made an immense start in the last few years, and nobody could deny it. With some sad exceptions, we are all better off. We have forgotten the old days of rationing, shortages and all the rest of it. Somebody sent me the other day a journal called the Co-operative Branch Managers' Magazine, an admirable publication but not, I would suppose, unduly biased in favour of the Tories. I would quote from its last month's issue. This is what it says:
When one remembers that only six brief years ago we were still living in austerity, it should stifle any wish for complaint that we might have.
That is very good. That is the Co-ops. People are far better off, and they know it [HON. MEMBERS: "Read on."] The trouble is that we are acting as if we are just a bit better off than we really are. Therefore, although I regard the situation as serious, and as one which easily might become dangerous if it were not dealt with firmly, I do not regard it as a situation which it is beyond our power to master if we but have the will.
Naturally, I regret that my first opportunity to open a debate in this House in my present office should have to be devoted to somewhat negative and restrictive aspects of the economic situation. In our view, our economic policy must, over the years, be positive, expansive and constructive, and it has certainly been so over the last few years. But there is a season of growth and there is a season of pruning. Let us hope that after the pruning, when we are sure that it has done its work, the growth may start again with renewed vigour.
I said that we were agreed upon the diagnosis and the Amendment, I think,


proves it. It is when we come to prescribe the treatment that there is, naturally, divergence of view. There are really two broad approaches to the problem. There are those who say, "Let us apply the direct methods of physical control, internally and externally. Let us reintroduce building controls. Let us revert to the control of imports by licensing. Let us by control, allocation, rationing and all the rest see that we do not use too much of the materials selected for control—including, of course, food." Then, this argument would end," and, of course, let us not shrink from price control." That is one line of treatment.
The exactly opposite line is taken by those who say that such measures never have been, and never will be, successful for their purpose. They point out that controls do not really deal with the cause of the disease but with the symptoms, not with the inflation or the underlying causes of inflation but rather with the places where the inflation breaks out. I remember reading many years ago a volume of essays by a very well-known writer, Mr. G. K. Chesterton, in which he used a phrase which has always stuck in my mind:
You cannot cure chicken pox by rubbing out the spots.
Between these two lines of treatment, which, I think, I have described fairly, I do not want to take a doctrinaire position. I would simply ask myself two practical questions: First, will the controls that are suggested do the trick? Is there anything that has happened in the past to encourage us to believe that they will work better in the future? Secondly, would they have to be applied so widely as to enforce a degree of regimentation that no democratic party or people would accept. In other words, will they lead to what another great contemporary author called the "servile State"?
Let us examine them. Let us take, first, the building control. I must be frank and say that I have examined very carefully the possibility of reintroducing the building control. I knew something about the building control a few years ago. Apart from housing, to which, if I remember aright, in practice it did not apply, I was always running into it in things like the rebuilding of the blitzed cities, the development of the new towns, the building of shops.
I remember that hon. Members from both sides of the House used then to beg me to break through the regulations and to override the administrative delays. It was not Members of only one side of the House who used to come to me, but Members of the other side just as much, when their localities were affected. They used to prove to me in great detail that the whole elaborate machinery organised by the Ministry of Works and operated by the local authority agencies, with the complications of the sponsoring Departments, was so intricate and difficult as to be really unworkable.
I do not think that either side of the House was very much enamoured of the building control. But I have not ruled it out of my thoughts. It is quite true that it would need a Bill, but I have no doubt that the House would pass such a Bill if the Government asked. [Laughter.] I understand that the Opposition rather like the idea. Therefore, that is not the difficulty. The real difficulty is, judging from past experience, that the control is one of the most unsatisfactory in operation. To make a significant reduction in building, the control must be compulsory, but at the present time 92 per cent. of building is housing by the local authorities or central Government building; only 8 per cent. of the whole is commercial building. This control would have to be compulsory; the compulsory machinery would have to apply to all types of building; and so the most careful definition and administration are needed; but, of course, a uniform definition of non-essential building cannot be put into an Act of Parliament. It can be made to function only in a rough and ready way on pragmatical considerations in each case.
For instance, I am told that there are some cinemas being built and that those are not essential. I have made inquiries and find that there are now three cinemas building in this country. I have no doubt they are in new towns. In a new town, which, today, may have 30,000 or 40,000 inhabitants, or on a new housing estate, is it not reasonable that there should be a cinema? I am told that there are some public houses being built. Naturally, some people—and I rather miss the former hon. Member for Ealing, North—believe that they are never justifiable.
I expect, too, that the new public houses are sited in the great new centres of population which have grown up, which have sprung into being because since the war we have built 2¼ million houses. In my three years we got a million. After that one really needs the chance of a drink. At the end of it all I feel that this costly and elaborate system of control would not achieve our purpose either as quickly or as efficiently as the system of credit and fiscal management which we are now working.
I come to the second form, import controls. I think the same is true of the import controls. They would deal not with the cause, but with the symptoms, and—this is of great importance—unless they were widely extended they would not bring very much relief. If they were extensively applied we should have, of course, to re-create the whole apparatus of allocation and rationing and all the rest of it. There would also be very serious repercussions on our exports and upon the whole of our international trading relations. Retaliation does not follow if imports drop from natural causes, but it is soon likely to follow artificial cuts by quota or by licence.
The objections to import controls apply with even greater force to the control of prices. The basic cause of our trouble is this: more purchasing power than there are goods to spend it on. Price control does not make any more goods available. It does not make any more goods available from our own production. What it must inevitably do is to lead to more consumption. But if price-controlled goods are imported, that makes the balance of payments worse. Imports would have to be limited and, to prevent a black market, the goods would then have to be rationed.
If, however, we keep down one set of prices, then there is more money, assuming inflation goes on, to be spent elsewhere. By our sitting on one pressure point, the pressure is transferred with extra force to another place, and if imports are not drawn in to relieve the pressure, what happens? Exports will be held back and the balance of payments suffers again. Thus price control as a remedy for inflation will make the most dangerous point weaker still. The only hope of making it work would be to extend it to

nearly all commodities and back it up with rationing. That way we might, perhaps, succeed in suppressing the inflation, as was done in the war, until, of course, it would burst out again with redoubled vigour.
If we did not accept the full totalitarian course, if we did not accept rationing and the whole hog, if we tried to use price controls here and there as other Governments have done, they would show themselves again to be, as they did before, a total failure to remedy inflation. I feel that the whole nation breathes more freely because it has emerged from these controls. If I remember aright it was the right hon. Gentleman the Member for Huyton (Mr. H. Wilson), who is to follow me in the debate, who once helped us towards this freedom.

Mr. Cyril Osborne: He had a bonfire.

Mr. Macmillan: I was coming to that. He celebrated his success with a well-known bonfire.
I observe that the right hon. Gentleman the Member for Ebbw Vale (Mr. Bevan) has a rather different account. This is what he said in an article in the Daily Express last week:
The Labour Government…abandoned all kinds of physical controls over the economy, in sheer weariness and frustration.
Perhaps he never approved of the bonfire. Or perhaps the two right hon. Gentlemen are not quite on the same terms as they were then. In any case, we ought not lightly to re-enter this prison, and I hope that the right hon. Gentleman will not try to persuade us to do so.
I now come to the question of Government current expenditure, on which I think it is very important that I should say something. There has been a good deal of criticism in the Press that the Government have not been able to reduce the Estimates presented for this year to a figure lower than that presented last year. I do not want there to be any misunderstanding of this. To begin with, the size of the Estimates in money terms is not the only or, indeed, the most reliable indicator of the burden of Government expenditure. We must bear in mind the size of the burden in real physical terms, its call upon labour and materials and—more important still—the proportion it bears to the total size of the economy: the toll it takes of our strength.
In real terms, the new Estimates represent a reduction of 1 per cent. on last year's. In money terms they have risen more slowly than the national income, of which, therefore, they represent a lower proportion. So we are moving in the right direction, and we shall go on with the good work. The Estimates are presented at this time of the year, as the House knows, in order to allow the machine of Parliamentary financial procedure to start upon its long and rather wearisome journey. They are the sums which Her Majesty's Ministers ask the faithful Commons each year to provide for Her Majesty's service. But there is no absolute obligation, however well we try to estimate, to spend them in full. Indeed, many millions in this Vote on Account will certainly not be spent, following upon the reductions in the food subsidies which I announced on Friday.
We shall go on with the work of pruning and examining expenditure all the year and I am sure that there is more that we can squeeze out. There is the 10,000 to 15,000 reduction of the Civil Service, for which I have taken no credit in this year's Estimates in money terms. Then there is the everlasting search for minor extravagancies and even follies; and in so vast an organisation as the Government machine it would be strange if there was none of these.
Finally, there are the reassessments which must continually be made of what we need as a nation or can afford as a nation. There are changes of policy or changes of situation which may allow substantial reductions. It was to all this that I referred on Friday when I said that we
…shall not hesitate to ask the country to accept a reduction of existing services, if we judge it at any time proper and expedient to do so."—[OFFICIAL REPORT, 17th February, 1956; Vol. 548, c. 2676.]

Mr. F. J. Bellenger: Is the Chancellor saying that the estimates to be shortly presented to Parliament in his own Budget will be inflated?

Mr. Macmillan: I did not say that. I said that in the course of estimates, once a year, this work of trying to make savings and of looking either for minor or for larger savings which might come out of policy should not cease and should go on all the year. I hope that the work will be fruitful in the course of the year.
I now come to the credit measures which I announced on Friday. Perhaps those measures affecting ordinary people and especially young people the most are the hire-purchase changes. The new measures in this field fall into two parts. First, there is the further restriction on credit for consumer goods. Secondly, there is the extension of the control to the terms of credit for capital goods. Restrictions on consumer credit were brought back in February, 1955, and the restrictions were again increased in July. They are now being increased yet again for the simple reason that consumer demand is still excessive. The extension of the control to capital goods is a new feature. The reason is that the excess of investment demand is now plain for all to see and the nation cannot afford to let it be inflated yet further by credit from this source.
I am not against hire purchase. Properly used, I think it is an admirable instrument to help people of modest means. It is also a very useful instrument to help industry and employment in times when there is danger of a recession which might perhaps develop into a slump. But in a period of boom, where too much is already being borrowed, it is not a very good plan that every household should be loaded with debt. We were entitled and, indeed, bound to take these additional steps on the hire-purchase front. It is vital for us to force more goods into the export market. It is expedient that genuine savings should increase.
I know that these proposals will be a disappointment to many people, and that they will result in some temporary dislocation of trade and industry, but I am sure that they will be understood as part of a campaign in which we must all take part, because if we pick and choose, and refuse to accept any part of the plan which we happen to dislike, the plan will not succeed. The plan may be approved in principle, but if it is objected to at every point in practice it will fail. There is one minor change on the previous Orders which the President of the Board of Trade has agreed to make. Under the new Order, we have decided to omit baby-carriages and perambulators. I have nine grandchildren, so this rather appeals to me.
I pass now to other credit measures. Monetary measures have a double part to


play. First, they check demand. Secondly, they encourage savings and so reduce the amount of excess income before it is spent. What are these monetary measures? First, there is the rate of interest. I think that we all know about that and I need say little more. I have seen very little criticism of the higher Bank Rate except, perhaps, that it should have been increased before.

Mr. Percy Shurmer: What about the local authorities?

Mr. Macmillan: I saw in one of the newspapers the statement that the Chancellor had at last broken his intolerably long silence. I think that something of the same complaint is embodied in the Liberal Party Amendment today, which wishes to leave out from "House" to the end of the Question and to add:
while noting the belated action now proposed by Her Majesty's Government, condemns the failure of Her Majesty's Government to take measures necessary, and in good time, to stop inflation, stabilise the value of the pound sterling, increase our export trade or, in particular, to reduce, or even to hold down, the cost of living.
This is really rather hard. I went to the Treasury on Christmas Eve and I have produced my plans by the first Friday in Lent. I think that that is rather good going.
Then there is the control of the authorities over the supply of credit and capital. Apart from hire purchase, this is exercised through the banking system and through the control of borrowing and capital issues. So far as the banking system is concerned, there has been one notable result from the timely measures taken by my predecessor. [HON. MEMBERS: "Oh."] Indeed, I am a fortunate man compared with him. I succeeded to four years' good work. Let hon. Members consider the contrast. The year 1955 saw a spectacular reversal of the trend of deposits. These fell by £294 million over the year, compared with a rise of £184 million in 1954. In addition, the policy of the bankers in reducing overdrafts and restricting new lending is becoming more and more effective.
I hope that the House will not think or believe that the bankers are concentrating upon what is called "the

small man." It is true that some small men are in a weak position, but the real effectiveness of the squeeze is becoming more and more marked upon the big borrowers. Many large industries, besides using their internal resources, were accustomed to borrow from bankers to finance the expansion of their enterprise until permanent capital could be raised. Such bridging operations, as they are sometimes called, are being curtailed by the banks, and the result is that industry is being forced to borrow from the market.
Here there are two hurdles. First, there is the Capital Issues Committee and, as I told the House on Friday, that Committee is being instructed to operate in a more critical and stringent way. Secondly, there is the judgment of the public. When these enterprises borrow from the market, it has two advantages. First, the public is more critical in its judgment even than the banker, because it is deciding whether or not to make an investment of its own savings. Secondly, if these market issues succeed, they are drawing upon real savings and not upon inflationary credit.
Before leaving credit and monetary policy, I should like to say a few words about Exchequer borrowing. I do not propose to weary the House, even if I were capable of it, with an essay about this very highly technical subject, but it is a problem on which a good deal has been said lately and to which it would be right to call attention. It has been accentuated since the war by a new feature, for whatever arguments may be used about the rightness or wrongness of nationalised industries from the management point of view, nationalisation has certainly added a very new and large problem to Government finance—a very heavy annual burden. The great problem is how it is to be handled. All these matters will require attention, and if they should arise in the course of the debate I will ask my hon. Friend the Economic Secretary to deal with them when he speaks.
Now I come to the savings on capital account on that part of the economy which the Government control directly or indirectly. I think there is a general feeling in the country, which I believe to be soundly based, that we are all trying to do too much on borrowed money. The


savings we have made in the final review of the Estimates for the year have included expenditure which, in the ordinary sense of the word, would rank as capital expenditure. Our national "system of economy is very confused in that way. In the statement I made on Friday I estimated the reduction in Government capital expenditure at £20 million. The actual figure will be £22½ million, and the appropriate reductions will be made in the Estimates before they are presented.
For the nationalised industries, the reductions announced in my statement of Friday represent cuts made in programmes which various authorities submitted to the Government for capital expenditure in 1956. In some cases these cover the calendar year 1956 and in others the financial year 1956 to 1957. These programmes had already been revised downwards before submission as a result of requests which had been made by my predecessor. However, as a result of further examination and reassessment of priorities, the various authorities, taken together, have undertaken further to reduce their proposed capital expenditure in 1956 by about £50 million in all. I am very grateful for the ready co-operation which they have shown.
With regard to savings in local government expenditure, as I have said already, it will not be easy to give a precise figure. We do not want to cut the expenditure in the normal sense of the word—that is to say, by abandoning projects. On the contrary, we want all the things which are being built to be finished as soon as possible. However, we do feel that it is necessary to time new expenditure properly since it is the pressure of too much work on the building and other industries which is causing the prices substantially to rise. Also, that same pressure brings great disappointments in dates of completion, and programmes become so crowded that they cannot be carried out.
The proposals of the Government for housing are embodied in the Bill now before Parliament and I have nothing to add. I only wish to say that we do not intend to return to allocations for the local authorities or to licensing controls for the owner-occupier. The owner-occupier is the best saver of the lot. Every week he saves to buy his house, and that is a lasting capital asset. When I became

Minister of Housing and Local Government only 25,000 houses a year were built for owner-occupiers whereas about 120,000 were built in the last calendar year. I think that that is very good.

Mr. Roy Jenkins: The right hon. Gentleman has made an important point about the owner-occupier being a valuable saver. Could he explain to the House the essential difference between the owner-occupier and the hire purchaser in this respect?

Mr. Macmillan: The hire purchaser is buying something which has a very short life—[HON. MEMBERS: "Nonsense."]—and, as I have just observed, the man who buys a house buys a lasting asset which he can hand on to his children. If the hon. Gentleman had ever bought a Ford motor car he would know the difference. [HON. MEMBERS: "Oh."] Or any car.
I now turn to education. This is a clear case of a service which is not only adding to the excessive pressure of demand, but is itself suffering from that pressure. Owing to the inability of our resources to meet all the demands made upon them, the 1955 to 1956 school building programmes have got into arrears. If we simply let this year's carryover pile up on top of the 1956 to 1957 programme, matters would grow still worse. Some postponement of starts will help in bringing about a better balance in the building industry. It will also mean that the schools now under construction will be finished more quickly.
Other local authority projects are of a very miscellaneous character. I can only deal with them in a very general way. Broadly, the policy is that for a period of at least six months the grant of new loan sanctions will be severely restrained. There will be a virtual embargo except in cases of special urgency—as, for example, with water or sewerage schemes, or where risk to health, safety or other interests makes this vital.
To complete the picture, I ought to refer under investment to the suspension of the investment allowance, with two important exceptions, namely, the creating of scientific research assets and shipping. I gave the full details on Friday and I observe that this decision has been received with general approval.
Before I go on to speak of the remaining item in our programme of cuts—the reduction in subsidies—I would like to say a word about the total effect of the measures I have announced. It would be a great mistake to add up those items which can readily be expressed in money terms, and to conclude that this sum represented the full measure of the curb which the Government have now placed on the economy. Some of the most powerful restraints cannot be expressed in exact money terms. The stiffening of hire purchase terms, the further restraint on local authority investment, the removal of the investment allowances and the raising of Bank Rate represent as The Times newspaper has said, a cut of several hundreds of millions of pounds.
Moreover, the great bulk of the reductions in demand are concentrated upon that part of the economy which is now the most overloaded, the metal using industries. The relief to the economy is, therefore, much greater in the field where relief is most needed—much greater than anyone might assume who looked merely at the global figures in terms of money, and who did not pause to analyse their real effect. Those are the reasons—whether I have judged rightly or wrongly the future will prove—why I believe that the disinflationary programme is adequate to present circumstances. If I am wrong, I shall not hesitate to take any opportunity, in season or out of season, to squeeze still further the volume of national purchasing power until we have mastered the inflation.
Politically, of course, the most difficult decision the Government had to take concerned the reduction of the food subsidies. Let me tell the House why we were led to the inescapable conclusion that this step was necessary. We must begin with the fact that the demands of the economy on its resources have to be reduced. We then proceed to cut down some of the demands, especially the demands of investment, and to defer others. In so doing we accept the unhappy necessity, in view of a pressing emergency to postpone for a time the benefit which productive investment confers upon the strength of our economy and upon our standard of life. That is a serious step to take. It would be far more serious if we had gone further and made the investment cut bigger still

in order to avoid cut in current consumption.
We must not draw too much upon the future even to protect the present. We have aimed, therefore, at some reduction of consumption, by providing that purchases of vehicles and of a great range of household goods shall be made to a greater extent out of the consumers' own money, and to a smaller degree out of borrowed money. At a time when the economy as a whole is overloaded, that seems a reasonable thing to do.
We have to go further and make some reduction in the purchasing power of the whole body of consumers. How do we do it? Surely it is obvious that if total consumption is to be reduced we ought to stop subsidising some part of it. Subsidies on bread and milk have a social and not an economic purpose. Nowadays, they have one great weakness, which obtrudes itself more and more as the years go by. They are not related to need. Today, we are making a present of a few pennies on every loaf of bread, not only to Surtax payers, but to a great number of other people who enjoy a standard of life which is by no means dependent on this small weekly present from the Chancellor of the Exchequer. Indeed, if this were given to them in pennies every week they would resent it as insulting.
I know very well that bread and milk are basic foods, but I do not believe that the rise in the price of bread and the very small increase in the price of milk will have any appreciable effect on their consumption, except perhaps to eliminate a small amount of waste which is apt to occur when anything in universal use is sold below its real cost. The effect of reducing these subsidies will fall elsewhere in the field of consumption.
It will operate, as it is intended to operate, as a minor reduction of purchasing power. If this measure is allowed to exercise the remedial effect at which it aims, the slight rise in the cost of living which it entails will be a very small price to pay as a contribution to a very great end. Last year, the Interim Index of Retail Prices rose by 9 points. This means that inflation cost the consumer in one year nine times as much as these subsidy changes, even if they should have that permanent effect.
I am not, of course, suggesting that this involves no sacrifice to anybody. Cutting


consumption is only another word for imposing sacrifices. I am well aware that there are some families who will have to forgo some pleasures, some indulgences, or put them off for a time until our economy resumes its progress. But if we are not to belittle it—and I do not belittle it—I do beg the House not to exaggerate it.
I must remind the House what these cuts mean. They mean 2d. a head a week now, and another 2d. in July. The two together amount to 1 point on the cost of living index. While I am on the point of the cost of living index I would point out that the figure for January, published tomorrow, will show a fall of I point.
Surely it is obvious that the vast majority of those who will feel these subsidy changes at all will feel a loss which is only a fraction of the gains they have made during recent years. The Government must, of course, take the lead in the battle against inflation. They must try to do the work themselves. But if their efforts are to be fully successful the community as a whole, and industry in particular, must be prepared to co-operate. They must be content to bear their share of the general check in our national spending and not make a personal or political grievance out of it.
I can understand hon. Members opposite arguing that they would have done all this in another way. We can argue that for two days, and agree to differ about it, but surely hon. Members opposite will not feel justified in saying that unless the Government are prepared to accept their particular method they will set out deliberately to hamper and defeat efforts which they believe to be for the common good. I will add this. Let the people judge.
There are many trade union leaders here and there are many outside whom my words may reach. Perhaps I might be allowed to say this without, I hope offence. The collective bargaining power of the trade unions is considerable in a state of full employment. I hope we shall always have a state of full employment; but is it really right to use that power to contract out of a measure of sacrifice imposed on the community in an effort to defeat inflation?
If we all have to accept a bit of a check in our progress, I do not think that

the trade unions will be right in taking the line that they and their followers alone can avoid it. The same obligation rests upon those whose decisions determine the rate of profit and, especially, the level of dividends. I am well aware that the amount of purchasing power which these involve is only a small fraction of the wages involved, but we must face the fact that dividends are a conspicuous element in our economy and that they have the force of example. I know that shareholders cannot be expected to bear the burden of a fall in the value of money from which other sections of the community attempt to protect themselves, but there is room in dividend policy for the same long-term and enlightened view and the same readiness to rise above self-interest and sectionalism which I am asking the trade unions to consider.
The real danger to our economy is in the fact that our money income persistently outruns our production. This has happened under all post-war Governments in every year since the war. This is far the biggest reason why prices have never ceased to rise under all Governments every year. It is not the only reason, of course. The statisticians tell me that, in the past nine or ten years, higher import prices account for about one-fifth of the rise in prices. The action of Governments of both political colours in changes in taxes and subsidies accounts for about one-eighth of the rise.
Those are the figures: import costs represent about one-fifth, and reductions in subsidies represent about one-eighth. The rest, two-thirds, of our unprecedented post-war inflation is the result of our over-reaching ourselves in the money incomes which we all—the Government, management, industry, and workers—have paid to ourselves or seized for ourselves. There is our weakness. That is our danger. It was not cured by planning and controls. It has not been altogether checked by more liberal methods.
Therefore, I think the House and the country should consider these measures carefully and judicially. They are not being taken against a background of heavy unemployment, of low wages or of distress. They are taken against a background of full employment, high wages and a rising standard of living. But the enjoyment of these benefits carries with it very real responsibilities. We cannot


assume them—none of us can—as if they were natural rights. Self-discipline in our economic behaviour is essential for their continuance, and when we fight the battle to end inflation we are fighting to defend full employment, for, ultimately, the one would ruin the other. In this fight the Government must lead. They must not be frightened to lead. They are not frightened to lead, but the country must follow.
Of course, I know that no mere words of mine can induce this House or the men and women in industry, on either side, to rise above their natural prejudices or even their sectional interests, but I hope we may all remember that if we do fall short at this testing time then we shall all pay the penalty—all of us, we and our children. Let us face inflation as a common enemy. In the past, our common national effort saved our freedom and redeemed our greatness. I only beg that faction may not now destroy what unity then achieved.

4.51 p.m.

Mr. Harold Wilson: I beg move, to leave out from "House" to the end of the Question and to add instead thereof:
recalling that the policies of the Government have held back our exports, swollen our imports, forced us into a balance of payments deficit, helped to reduce our reserves by a quarter and driven up our domestic price level, has no confidence in Her Majesty's Ministers or in the measures now proposed by them to overcome the economic crisis.
As the Chancellor of the Exchequer said, those words are not original. They have been taken from his own verdict on what he has just called the "four good years" that he inherited from his predecessor. They are his own words used in this House last Friday.
The speech of the right hon. Gentleman has been a profoundly disappointing one. One would have expected him at so critical a time to have given the House a calm, sober appraisal of the economic problems which the country is facing and some attempt at any rate to justify the measures that he has introduced. Instead we got a mixture, the usual mixture, of some very slight arguments, which, I might say, could be put far better by the Economic Secretary, and, apart from that, some of the right hon. Gentleman's knock-about debating which I thought he

would not have been using in his present capacity.
The right hon. Gentleman made an appeal to the Opposition. He said he hopes that, whatever we think about his policies, we shall do nothing to inhibit the success of what he is trying to achieve. I am prepared on behalf of my right hon. and hon. Friends to give him this assurance, that whatever we may think of the right hon. Gentleman, we shall not treat him as his party treated Sir Stafford Cripps. In his concluding words, the right hon. Gentleman appealed to the trade unions to rise above self-seeking and sectional interest. Those words sound nauseating to us coming from the mouth of a Government responsible for last April's Election Budget.
In the earlier part of his speech, the right hon. Gentleman attempted, rather slightly I thought, to justify his decisions about certain physical controls, import licensing and building licensing. I hope to deal with those arguments a little more fully in a few moments, but, since the right hon. Gentleman was kind enough to quote what he called my "bonfire of controls," perhaps I might be allowed to put him right on that. That was not my phrase. It was invented by the Press, rather naturally, because the announcement was made on 4th November. What I was doing was to get rid of a great number of war-time controls which were based on quotas, themselves going back to pre-war days, which prevented any expansion or elasticity in industry because many firms were restricted in their imports and production to some percentage of what they had been doing ten or more years earlier. But we maintained the key strategic controls which were necessary over the location of industry, price control, import control and building licences. I shall come to that again in a few moments' time.
With last Friday's statement we have now had three crisis statements and two Budget statements in less than a year, and Friday's statement was described by the Daily Telegraph as a semi-Budget. It is now less than four months since the autumn Budget. It is only a little over two months since the friendless Finance Bill left this House for another place.
In the few weeks that have elapsed since then a number of things have happened. We have had a change of


Chancellor, for one thing. We hoped that this would mean a change in the disastrous policies of the last four years. So far all that we have had is a change in the metaphors and the clichés with which these problems are introduced.
The previous Chancellor favoured equestrian and horticultural metaphors; he went round "curbing the spirited horse," "pruning the roses," and pausing only to "blow off the froth" from time to time. The present Chancellor is on an entirely new tack. We congratulate him on his very homely metaphor of the electrician, blowing fuses and pulling out plugs. I see that last Friday in his own constituency it was "sprats to catch mackerels."
We hoped that the change in Chancellor would mean more than this. We hoped it would mean a change in policies. We hoped that a fresh mind, or a reasonably fresh mind—we would all want to give the right hon. Gentleman credit for that—would want to sweep away the flyblown, discredited notions of his predecessor, but it is clear that the Chancellor is not a free agent. Whatever conclusions the Chancellor may have reached, he was not free to carry them out. The Lord Privy Seal is watching over him. In fact, the Lord Privy Seal warned him in advance. Two weeks ago, addressing a gathering of advertising interests, that master of the elegant backhander, the Lord Privy Seal, had these words to say. I quote from the Daily Telegraph:
We should support my successor as Chancellor, Mr. Macmillan, in any continuation of the policies I thought necessary to adopt. He has my support and encouragement, and so has the Government, in the attack on inflation.
"In any continuation of the policies he thought necessary to adopt"; not "in any policies the Chancellor might think necessary." I suppose that if the Lord Privy Seal had been feeling really enthusiastic he would have called his right hon. Friend "the best Chancellor we have."
It is really a matter for sympathy. We can all see the cruel dilemma with which the Chancellor was faced. Either he had to continue the disastrous policies of his predecessor which had brought the country to the brink of financial ruin, or if he struck out on a bold new line he would immediately be repudiated by his

most formidable colleague. Therefore, we see the financial policies of a great nation dictated by the personal relationships between the two right hon. Gentlemen. Right hon. and hon. Gentlemen opposite talk about dissension in the Labour Party. We are amateurs at it compared with the professionals of the Tory Front Bench when they get going.
However, I am sure that the House will agree that the crisis is far more important than the rivalries and jealousies of two right hon. Gentlemen opposite. The first and stark fact—and the Chancellor said very little about this—is the state of our gold and dollar reserves. Last year they fell by 642 million dollars. As the Chancellor said, in his own little private dig at his predecessor last Friday, they fell by a quarter in a single year. They have, in fact, fallen by 30 per cent. since June, 1954. They were standing at a little over 2,100 million dollars: 1,120 million less than when this Government took office—34 per cent. down. The whole House will agree that these reserves are dangerously low. The country could not stand another drain in 1956 of the intensity of last year—600 million. There comes a point—I do not wish to venture to suggest what it is, some say 1,500 million and some 1,600 million—when confidence factors can cause such a run on sterling that a Chancellor is forced into devaluation.
I want to repeat what I said to the right hon. Gentleman when he took over the Treasury. We on this side of the House are as determined as is the Chancellor to preserve the exchange value of sterling, because the exchange value of sterling is not a party asset, it is a national asset. It is in fact even more. Half the world trade, as we are frequently reminded, is conducted in sterling and so, as the Chancellor fairly said, our quarrel with him is not about objectives but in the aim of achieving them. The drain last year was an extremely serious one. It may not have struck the Chancellor that it was in fact in a single year worse than the average of the three years 1949–51. We lost more gold and dollar reserves last year than over the average for those three years, 1949–51.

Mr. Osborne: More than last year?

Mr. Wilson: I know that it is always difficult for the hon. Member for Louth (Mr. Osborne) to appreciate these points,


but when I say an average, I mean the total figure for the three years divided by three.

Mr. Osborne: rose—

Mr. Wilson: I cannot waste the time of the House by giving way to the hon. Gentleman. The last time I did so all we got from him was an announcement that the former Chancellor was staying at the Treasury. Since it is quite clear that the hon. Gentleman is no longer in the Prime Minister's confidence, I cannot spare him the time.
I have just told the House what I think most hon. Members already knew, that for those three years as a whole—and 1949 was a bad year and so was 1951—the average loss was less than in 1955.

Mr. Osborne: What about 1951?

Mr. Wilson: The hon. Gentleman must be patient. The figures I have given are not the result of Marshall Aid. Marshall Aid is disregarded altogether. I have also disregarded from the 1955 figures the December payment under the Washington Loan Agreement. The hon. Gentleman asked "What about 1951?" That was a year when, as the whole House knows, there was a serious run on sterling due to the collapse in the price of sterling area raw materials following the collapse of the post-Korean boom. But 1955 was, in terms of world economic conditions, a highly favourable year. The Banker, a magazine which I am sure the Chancellor reads, said:
Britain dare not assume the permanence of the external climate that so powerfully aided it during this difficult year.
The terms of trade, which had turned against us by the end of 1954, had improved. Last year sterling area prices were high, especially rubber, with the dollar earnings that represented. There was an unprecedented world boom. There was an unprecedented boom in the United States, making our job easier.
That was 1955. Since then we have had the gold and dollar figures for January. We have a net gain of 29 million dollars. We were all glad to see that the outflow had been reversed. But 29 million dollars, as I am sure the Chancellor will agree, is not enough for what should be the most favourable time of the year. If we can get only 29 million

dollars in January, we are bound to ask the Chancellor what happens when Autumn comes—the least favourable time of the year for sterling—or what happens if any new factor arises to upset confidence?
Last summer we saw the effect, in terms of a run on sterling, of a few words said, or believed to have been said, in a private conference in Paris. We saw the effect in terms of a run on sterling last week, for no apparent reason. In December, there was even a small run started because of a rumour, or a leakage, that the former Chancellor was about to leave the Treasury—though goodness knows why that should have caused a crisis in confidence in sterling. The point is that we are not dealing with rational human beings when talking about this, and almost anything can start a crisis of confidence. That is what we must warn the Chancellor about, and I am sure he is receptive of this warning. He must not believe that he has solved the economic problem just because he has maintained a short-term influx of short-term capital. We had enough of that last year, as his predecessor could warn him.
On 24th February last year, rather less than a year ago, the then Chancellor increased the Bank Rate and had a swing a, hire purchase. Within days he was claiming that his policy was successful. We warned him that the real test was the relation between exports and imports and not the short-term influx of "hot" money. But he was still in that spirit and we had the Election Budget speech and the Election. What was the then Chancellor saying at that time? This is what he said in his Budget Speech last April:
…it became clear by February that we needed to take action to moderate the growth of imports and to encourage exports. And from the result, all I can say is thank goodness that we took action in time.
He also said:
But the situation had been brought under control, as, for example, is shown by the movement of the reserves since then and the latest rates for sterling."—[OFFICIAL REPORT, 19th April, 1955; Vol. 540, c. 39–40.]
That is what he was consoling himself with on the eve of the General Election.
Then we had the Election broadcast when the right hon. Gentleman addressed many millions of people. He said then,
We have restored the national solvency.


That was his claim. Referring to the measures of 24th February he said:
We are beginning to see the first effects. Our trade figures are better and we are once again holding the position of our reserves.
That was in April. He was able to say, or trying to claim, in the Election that the measures of 24th February were successful. I think it is now plain to the country that this Government not only obtained office in 1951 on a fraudulent prospectus but retained office last year on a fraudulent directors' report, because in July, within a couple of months of the Election, we had another crisis and another statement from the right hon. Gentleman. Within 24 hours of that action he was claiming that his measures were proving successful.
Within a day of announcing the measures of 25th July last he was on his feet in this House justifying the success of his action in terms of a purely short-term run of money. Yet by August again there was a new crisis developing. The Government have still not learned—I hope the Chancellor will learn from this—that they must not be misled by short-term runs in foreign exchange markets but that what counts is the balance between exports and imports.
If we look at 1955 as a whole, we find, making due allowance for the sort of factors dealt with in the Government statement, that exports were up by 5 per cent. on the previous years and imports by 15 per cent. and that the trade gap worsened, a disquieting worsening compared with the previous year by £300 million. It is odd, but the Chancellor may remember that in February of last year we warned him that, on the drain of the first few weeks of the year, it looked as though the trade gap would worsen over the year as a whole by £300 million. That is exactly what happened.
Then we had the January, 1956, figures, the figures published a few days ago. Now, twelve months after the action which the right hon. Gentleman thanked goodness he took in time, we have a visible trade gap of £74·2 million in a month. That is £2·1 million worse than the monthly average for last year, and £12·1 million worse than the monthly average for the fourth quarter of last year. Can the Chancellor really claim that the credit squeeze is working in its declared aim of restraining imports and expanding exports?

Although we all welcome the meagre successes of the Board of Trade in expanding exports—they are still slowly rising—it one compares our export record with those of other countries one sees how dismal is the Government's performance.
If we compare 1951 with 1954, we find that exports in Western Germany—I realise that in this case there were special factors—rose by 52 per cent.; those of Greece by 48 per cent.; Austria by 34 per cent.; the Netherlands, 24 per cent.; Denmark, 14 per cent.; the United Kingdom, 2½ per cent. and France, 1·9 per cent. We were nearly at the bottom of the league. The same is true with regard to gold and dollar earnings. Sir Oliver Franks, chairman of Lloyds Bank said:
Since the end of 1951 the Continental countries have accumulated some 5,000 million dollars' worth of gold and dollars; our own reserves have actually fallen on balance and are indeed lower than in 1945.
There is the same gloomy record with regard to production. If we take the years from 1951 to mid-1955, we find that production in Germany rose by 54 per cent.; Greece, 49 per cent.; Austria, 40 per cent.; the Netherlands, 39 per cent.; Italy, 31 per cent.; France, 26 per cent.; Norway, 24 per cent., and the United Kingdom 16 per cent. Again, we were nearly at the bottom of the league. I do not need to remind the House that when the Labour Party was in office, up to 1950 we were at or near the top in all these tests—production, exports and gold position. These figures were proved and are proved by impartial international authorities. We were at the top of the league at the very time when the right hon. Member for Woodford (Sir W. Churchill)—whom we are so glad to see here this afternoon—was proclaiming that we were doing worse than any other European country west of the Iron Curtain.
Why have exports stagnated? It is not that the markets are not there. It is a direct result of the Government's free-for-all, unplanned and inflated economy. I will take two examples. Last year we mentioned the fact that the motor car industry was consuming large quantities of sheet steel and the export proportion was declining. We also reminded the President of the Board of Trade that exports of cotton piece goods in 1954 were lower than in any peace-time year since 1840. We did not think that they


could fall much lower, but they did; they fell by one-third, or 13 per cent., in 1955.
It is not that we have been priced out of the market—hon. Members opposite are too quick to assume that—although I admit that the Government's measures are in very serious danger of having that effect. The problem is much more one of deliveries, because of inflation. When the right hon. Gentleman talks about wages and wage costs, it is relevant to point out how this nation, under Tory freedom, has seen the cost of living rise very much more than has been the case with its main rivals. Again comparing 1955 with 1951, the cost of living in Western Germany rose by 3 per cent.; in the United States by 4·1 per cent., and in this country by 23·6 per cent. That is one league—the cost of living league—where the Government have put us at the top.
The policy of restraining imports is a result of inflation and, to some extent, premature decontrol. Many examples could be given. I will mention coarse grains. Imports of barley from Canada last year rose from £13·6 million to £21·3 million, and imports of maize from the United States from £18·4 million to £28·7 million. Does the right hon. Gentleman really suggest that these are the products we most need to buy with our scarce dollars?
He talked about import licensing, and mentioned some of the practical difficulties. One of the biggest difficulties is that which he mentioned, namely, the danger of retaliation from other countries against our own export trade. That is a factor which we all have to bear in mind, but I do not agree that licensing would mean allocations and rationing. It would do if there were sharp reductions in the quantities of basic foodstuffs or raw materials, but a very large proportion of the increase in imports today, both from dollar areas and Europe—where we now pay in gold—consists not of raw materials or foodstuffs, but of relatively inessential manufactured goods. There would be no need for a reduction in the supply of those to cause any rationing.

Mr. Osborne: rose—

Mr. Wilson: I know what the hon. Member for Louth is fussing about; he

wants to know about coal. He does not need to get up; we know what is in his mind. His mind has been in a rut for ten years. If he is anxious about coal, he had better ask his own Front Bench about it. They have been in charge for four years. Another thing he might ask them is how much more coal we would have to import now if we had not nationalised the industry.
I want to get back to the more serious point about the difficulties of import licensing. I know that the Chancellor is frightened that if import licensing were announced there would be a rush of imports in order to forestall any legislation he introduced. It is quite true that legislation would not be needed, but it would take time to get an import licensing scheme into operation. The right hon. Gentleman will know, from the experience of his predecessor in 1952, that it took some months to re-erect a system of import licensing. We always recognised that there was a danger of the Government's action being forestalled while the machinery which they had dismantled was being re-erected.
Perhaps the Chancellor will allow me to tell him how this could be done. He could rise tomorrow and announce that any importer importing the inessential goods to which I have referred could bring in only 100 per cent., 90 per cent.. or 80 per cent. whatever it might be—of his 1955 imports, by the end of this year. If he announced that while he was erecting the system of controls necessary there would be no forestalling of his measures, because any further imports would count against an importer's quota by the end of the year. It is not a question of practical difficulties in introducing import licensing, but the Government's refusal to consider it.
There is not time to go into the question of invisible imports and exports, but it is a fact that the Government's hopes of an improvement as a result of freeing the commodity markets have not been realised. We have not earned the vast sums of dollars that they hoped for. We were told that it would be a very big dollar earner. We have not earned much with the cotton market scheme, which has now practically broken down, and there is expert evidence to show that certain of the metal markets are, on balance, costing us dollars because of the way in which they are being operated.
How much more shall we be paying, in relation to our overseas balance of payments, as a result of the increase in the Bank Rate last Thursday morning? Already, in 1954, we were spending £110 million more than in 1951 in interest upon our overseas debt. The Chancellor told me a year ago, in answer to a question, that he thought an additional £30 million would be involved as a result of the then increase in the Bank Rate. If the same figure applies again it means that in terms of our invisible payments we shall now be paying £140 million or £150 million a year more, year in and year out. as the result of the Government's interest rate policies, than we were paying in 1951. Hon. Gentlemen opposite used to talk about groundnuts, which cost £36 million in all. The present Government are paying overseas £150 million every year, and we get nothing at all in return for it, not even experience.
I turn to the internal effects of inflation. The main effect is felt of course by every household in the country, and not only by those in Taunton, Gainsborough and Hereford. That is, in the cost of living. The right hon. Gentleman tells us that last year it rose by 9 points, that is, by 6 per cent. Food prices rose by 7½ per cent. So excited was the Chancellor of the Exchequer on hearing that the cost of living had actually fallen by one point in January that he immediately introduced measures to see that that trend was reversed.
Why are these increases taking place when world prices over the period have been falling? One reason is the end of bulk buying. [Laughter.] Hon. Gentlemen who laugh can find learned and authoritative support for the view that I have just enunciated. Whether they will understand it when they read it is another question. Another reason is internal decontrol, leading to increased profits in distribution. In fruit and vegetables there has been a very big increase in profits. Only a few days ago we saw an announcement by the furniture trade that it was planning to increase its distribution margin, or mark-up from, I think, 40 per cent. to 50 per cent. It could not have done that under price control but, being free—the Government have set it free—there is nothing to stop the trade from putting up prices, unless the traders are all driven out of business by the Chancellor's new proposals.
In addition to those other factors is the direct effect of Government policy, of the new "Boyle's Law," as it was christened during the recent Finance Bill debates. We heard a lot about it during those debates, but it applied only to pots and pans. Now it has been extended to bread and milk. That law, in its simplest form, is this, to get the cost of living down one must put prices up.
I ask the Chancellor of the Exchequer quite seriously what he thinks will be the industrial consequences of his latest announcement. We are all on very dangerous ground in talking about it, and I want to be extremely careful. It is no good talking about the small effect on the cost-of-living index. People do not live on indexes. I am afraid that, like his predecessor, the Chancellor of the Exchequer concentrates on the apparently logical and forgets the psychological in his approach to these problems. I hope I am wrong, but if he is trying to combine higher living costs with some pressure on industry so as to make industry unable to pay higher wages, he is really heading for some of the worst industrial strife we have had in this country. I hope that that is the last thing in the right hon. Gentleman's mind. If it does happen, the right hon. Gentleman and the Government will be the authors of it.
In one sense the economic crisis is a commentary on the failure of the whole series of Tory nostrums about which we heard so much in 1951 and before. Hon. Gentlemen opposite were going to bring down the cost of living. They were going to get inflation under control. They were going to ensure that this country was freed from periodic crises. How were they going to do it? First, by cutting Government expenditure. That is still a great plank in the platform of the noble Lord the Member for Dorset, South (Viscount Hinchingbrooke) though his party have left him standing almost alone.
All the Government were committed to this reduction of Government expenditure. The Minister of Education wrote a powerful article in The Times showing how to cut Government expenditure by 6 per cent. of the national income, or £700 million a year. Now, no doubt, the right hon. Gentleman would say that he was speaking only for himself and not for the Government. That is what he said in 1951. The late Chancellor, the present Lord Privy Seal, during the passage of


the 1949 Finance Bill, was very eloquent. I will not weary the House or embarrass the right hon. Gentleman by repeating what he said on that occasion. He was complaining about the big increase in national expenditure, and he said that if we could save only 5 per cent. on the total expenditure by eliminating waste we should have available £165 million. If we could do it up to the tune of 10 per cent. we should have £330 million. The right hon. Gentleman had four years and five Budgets in which to eliminate waste and to achieve the 5 per cent. or 10 per cent. cut.
I can tell him the result of his stewardship. In the period 1951–54—we have no later figures—the annual rate of increase in Government expediture was £273 million, against £127 million during the four years from 1947 to 1951. In other words, although our period of office included the period when the Welfare State was established in this country, which cost a lot of money, Government expenditure rose less than half as fast as it did under the Tory Government. [An HON. MEMBER: "Defence."] An hon. Member mentions defence. Of course, the cost of defence increased under the Labour Government as well as under the Conservative Government. If we exclude the defence figures, then the annual increase of expenditure under the Labour Government was £87 million and under the Conservative Government £130 million. There we have the end of another illusion.
Now the Government tell us, as we told them before 1951, that it is possible to reduce expenditure only by a change in policy. That is broadly true, and I think that both parties recognise that to be the case. I ask the present Chancellor of the Exchequer whether he feels that the Government are doing all they can to eliminate waste. I am not suggesting that this will make a spectacular effect as, for instance, the late Chancellor of the Exchequer suggested in 1949, but to read the Reports of the Public Accounts Committee year by year is like reading a horror comic. We heard of examples today. There are many examples of senseless and needless waste which can only be put down to bad administration.
I am not allying myself with Sir Bernard Docker or with any new

Poujadist movement in this country. I think the whole House would wish to be assured, so far as that movement is concerned, that all the funds that Sir Bernard is raising come from personal incomes and not from business firms under the heading of tax-allowed business expenditure expenses. I am sure that the Chancellor would be the first to agree that it would be ironic if he, through loss of legitimate revenue, were paying for the campaign that is being run against him.
Having dissociated myself from this particular campaign I must ask the Government—we shall be continually pressing them—to do all they can to reduce waste. We have to recognise that the Chancellor's policy last week has increased the National Debt payment by a further amount. I do not know how much. Perhaps my right hon. Friend the Member for Battersea, North (Mr. Jay) will be dealing with that point in greater detail tomorrow. Last Friday the Treasury Bill tenders were more than 5¼ per cent., compared with ½per cent. under Labour Chancellors of the Exchequer.
What is the main problem and what is the main cause of it? The Prime Minister gave an answer in his speech in his own constituency last autumn when he said, "We are doing too much" or, as the Chancellor of the Exchequer would say, "The circuit is overloaded." Some of us think that the right way to deal with an overloaded circuit is to re-wire the house—but that is what the right hon. Gentleman is unwilling to do.
However, accepting the Chancellor's analysis, we have four main forms of expenditure. They are armaments—that is to say the Defence Estimates; consumption; investment and exports—and we know that exports are the residuary legatee. If the others put up the pressure then, as we have seen in the last year or two, exports suffer. Defence expenditure will be debated by the House when it considers the Defence White Paper in a few days' time.
I do not want to spend a great deal of time on consumption. The right hon. Gentleman referred to it in his speech. It was quite obvious that he was aiming principally art the reduction of consumption by two means—hire-purchase restrictions and reductions in food subsidies. He told us that the hire-purchase restrictions were aimed at those with


modest incomes—and we know at whom the reductions in food subsidies are principally aimed, so we still feel that there in a certain, shall we say, social bias in the Government's approach to restrictions in consumption.
Again, I am sure the House will feel that there still is a very marked discordance between the Chancellor's harsh demands to reduce consumption and the sickly-sweet blandishments of the I.T.A. advertisements. And there is an equal discordance between the Chancellor's present appeal for reduced consumption and his predecessor's Election Budget of last April. If, however, he is in earnest about this—and if he is in earnest I hope that he will, for once, pay attention to reducing the consuming standards of the more well-to-do who could best stand it—his task will be to convert his colleagues.
He might start with his right hon. Friend the President of the Board of Trade, who, on 10th June last replied to me in these words:
What about consumption?
asked the President of the Board of Trade:
Do not let us be too afraid of our people consuming things. Sometimes, to hear the right hon. Gentleman, one would think it was terribly shocking for our people to be consuming things which ought to be all going into the export market."—[OFFICIAL REPORT, 10th June, 1955; Vol. 542, c. 162.]
That is the President of the Board of Trade speaking, whose education, I am afraid, has to be completed by his right hon. Friend the Chancellor.
I come now to what I consider to be the most serious part of everything which we shall be discussing in the next two days—investment. The cry is that we are investing too much. Well, that is a change from the Budget debates of 1953 and 1954, when the Chancellor had to come to the House and admit that in private industry investment was stagnating—that it was only in the public sector that the national need for more capital investment was being realised. I have just seen the 1954 O.E.E.C. figures which express gross fixed capital as a percentage of the national product. They show that of the 16 O.E.E.C. countries, Britain is next to the bottom of the list—Greece being at the bottom, for what satisfaction that may give the Government.
It is certainly true that over the last 18 months there has been a big upsurge in

investment. How much that increase is due to the investment allowances, how much to inflation—to easy profits—it is hard to say. The Chancellor, at any rate, takes the view that there must be some reduction in investments. Indeed, I think it is fair to say that he concentrates his main attack on investments.
This has been criticised, and rightly criticised. The Manchester Guardian on Saturday described it as the "easy way out." The Times said:
Immediate relief is being sought by mortgaging the future.
We must put to the Chancellor that the cancellation of these investment allowances is short-sighted. We still need investment—and all the investment we can get—of the right kind and in the right industries. Once again, as with investment in the public sector, the Government are reacting to the crisis by selling the seed corn. We shall pay a heavy price for this in future years with more economic crises. Year after year hon. Members in all parts of the House have stressed the neeed for more investment. The last Chancellor of the Exchequer attached great importance to the investment allowances as one means of achieving this. They belonged to his "Invest In Success" period, but now they have gone. Why is this being done? It is being done because investment as a whole—essential and inessential—has gone up. The Government refuse to distinguish between the essential and the inessential, so the Chancellor blindly swings an axe at the lot. This is a retrograde step, and it is the result of the Government's stubborn and doctrinaire refusal to introduce building licences.
I am bound to say that the right hon. Gentleman has produced no argument on that subject at all this afternoon. The point about building licensing is that it is selective. It enables one to select between the important and the unimportant building project. Let us take two projects planned by two different companies, one a firm, shall we say, exporting to the dollar area and wanting to expand, and the other quite inessential—say an office building for a football pools firm, or a block of offices built, as so many are, as a speculation for later. Or it may be the new Tory Central Office in Smith Square—something quite inessential.
The Chancellor's policy—high interest rates, the credit squeeze, the cancellation of investment allowances—falls on the just and the unjust alike. There is no discrimination. In fact, it is just as likely that it will be the building of the export factory which will be cancelled and the pools building which will go on. It is, perhaps, more likely that the unessential building will go on. Hon. Members are only too well aware that the credit squeeze is hitting small businesses, some of them highly essential, while the big industrial combines are free to expand.
The other method, that of building licensing, is not only effective and immediate but selective. In such a case as I have given, the Government would sanction the building of the export factory and veto the other. But the Chancellor refuses to use these selective methods. This morning, The Times said that it was because of a revolt of his back benchers. I do not think that that is true. I think it is because of the veto of the Lord Privy Seal. Whatever the reason, the Chancellor refuses to use these methods and so has taken these blind swings at the whole volume of capital investment, essential and inessential.
I want to make another point which, I am sure, will appeal to the right hon. Gentleman. He was talking this afternoon as though the choice were between controls and freedom—between restrictionism and freedom—but does he not realise that the credit squeeze is, by its very nature, a control and a restriction? The difference is that with physical controls the decision in every case is taken by a Crown servant acting under the authority of a Minister responsible to this House. With the credit squeeze, equally invidious decisions have to be taken by unhappy bank managers, but not necessarily on the right criteria. It was the magazine The Banker last autumn which referred to the bank managers'
intolerable role as having to act as planners for a Government that regard planning as impossible.
As the Chancellor knows, the bank chairmen have recently expressed themselves even more strongly on this matter.
I must say that the Chancellor did not produce any reasons for his refusal to consider building licensing. He seemed rather lighthearted about the building

situation. He said that 92 per cent. of the building is for factories and houses, and less than 10 per cent, for offices, cinemas, public-houses and the rest. It is, of course, true that the figures of building available to the House are scanty and inadequate, but let us look at the figures we have. The ex-Minister of Works, now Secretary of State for Air, gave some figures on 24th November last. He put the increase in miscellaneous building for 1954–55 at about £20 million. That is an increase of £20 million in what is mainly inessential building—and that figure excludes work on repairs and maintenance. I suggest to the Chancellor that £20 million is a lot of money and represents a lot of resources. If that expenditure had been curbed by controls he might have saved £20 million worth of local authority building from the axe. That could have saved the school programme. It could have saved part of the cut in council housing.
Last June in this House I instanced another case of inessential building. I mentioned petrol stations. The President of the Board of Trade again was not very impressed, I am sorry to say. Fresh from the hustings, he went into one of his passionate outbursts in favour of laissez faire. He said:
Is it a world in which we shall have to share scarcity, or one in which we shall be able to share abundance? If we are to share scarcity, of course we must go round saying, ' Do not put up a petrol station; we cannot possibly afford it. Do not let us have any luxury goods…'
That was the kind of argument he used. He said that freedom means that people must be able to build petrol stations. He said:
The programme which we are discussing is unashamedly designed to secure abundance, and to see that all our people can share very fully in it."—[OFFICIAL REPORT, 10th June, 1955; Vol. 542, c. 160.]
The people are sharing in this abundance with dearer bread, dearer milk, higher rents, fewer council houses and cuts in school building.
There were 1,100 new petrol stations built in this country last year at an average cost of, let us say, £10,000 each. That represents an additional £11 million on mainly inessential building. This excludes renovation, restoration and all the rest of it which the big oil combines are rushing around and doing in the sacred name of competition. If they want to compete in


oil, let them compete in price. At the moment they are doing it in building. I suggest to the Chancellor—and this follows from what he said this afternoon—that £.11 million has got to be set against this vicious circular which has been sent round by the Ministry of Housing and Local Government calling for a virtual embargo on new local authority capital works. I understand that one big oil company intends to build another 250 new garages or petrol stations this year. Does the right hon. Gentleman not recognise his responsibility in this matter?
In the main the Conservative view is that anything built by private enterprise does not come into account. But if the Chancellor deliberately decides not to introduce a curb on this kind of building, he has to take a much more savage slash at other forms of building. We were debating cinemas a few days ago. When the Chancellor talks about three cinemas, I can assure him that that figure is wrong. He is also wrong in suggesting that all the cinema building is taking place in new towns. It is not. Certainly the credit squeeze is not inhibiting Mr. Rank's empire building. Although, we understand, he has a £5 million overdraft, he bought 64 new cinemas last year. How much building work went into the rehabilitation of them? He is said to be building a dozen more. Which are more important at this or any other time—cinemas or schools?
The Chancellor gives as his excuse for the cut in the school building programme that that programme is lagging already. But why is it lagging? It is lagging because of the pull of this vast amount of inessential building, drawing off materials and labour. There is a new Gresham's law in operation in conditions of inflation. Bad building drives out good. When the Chancellor tells us that we must postpone new starts in order to get them finished more quickly, is that not what we were told in 1952 when all school building was stopped for three months? They were going to get the programme into phase. Now, he tells us, it is out of phase again.
It is no good the Chancellor pretending that a postponement of a programme from one year to another is not a cut. Of course, it is a cut. If he has any doubt about that, let me ask him this. Suppose he were to postpone the receipt

of his monthly salary cheque into another year. Would he regard that as a cut in income or not? Of course, it is a reduction. A postponement of a programme from one year to another is a reduction in the year in which it is postponed.
I am sorry to have to go into such detail on building, but it is important. For the rest, he said, it is factories, and nothing can be done about that. How many of these factories are contributing to exports? How many are contributing to import saving and strengthening the industrial base of the country? We have got some new figures for industrial building. These figures show that there has been a vast expansion in the motor-car industry, and now there is short time in that industry, and the Government are trying to reduce motor-car sales still further.
The other big expansion has been in the food, drink and tobacco trades. How much of that is genuinely essential to our balance of payments struggle? A great proportion of this is to extend and expand the production of those relatively inessential goods that we can see advertised on independent television—mainly consumer goods. Most of it is for the consumer trade, to meet the demands, or the imagined demands, that the over-inflated advertising trades are at present busy creating.
This argument about capital investment reveals the distinction between the philosophies of the two parties. We say: first things first; sacrifice the inessential for the essential; deploy the national resources on the things that the country most needs. But the Conservative philosophy is that interest rates can settle the whole thing. We had that stated once, in November, 1950, by Mr. Oliver Lyttelton as he then was, now Lord Chandos. This was the classical and imperishable statement of Tory philosophy:
If the industrialist thinks that a 5 per cent. interest rate for borrowing his money will still leave him with a profit, the plants will be built, but the marginal capital investments will be discarded."—[OFFICIAL REPORT, 2nd November, 1950; Vol. 480, c. 332.]
We are getting that system now. The marginal investments which are being discarded are the schools, sewage works, rural electrification, transport development and council housing. It is because the Chancellor cannot control the private


sector, or will not do so, that we are getting these further damaging cuts in local authority and public industry. The Chancellor is unconsciously paying a tribute to the public sector as the only planable section of the whole economy.
The Chancellor said at the beginning of his speech—and we welcome this—that he rejects the advice of those who suggest that this problem can be solved only by the deliberate creation of unemployment. I am glad the Chancellor said that. We believed him when he said it. We accept that assurance from him, that he will not be a party to the deliberate creation of unemployment as a means of solving this problem, as some powerful forces are at present suggesting. What we are afraid of is that with those very words on his lips he will walk backwards into unemployment as a result of an over-reliance on this monetary weapon. What happens if another crisis occurs—we hope it will not—as a result of some down-turn in sterling area prices? If he tries once again to meet it by an increase in the Bank Rate, we face a real danger of unemployment in this country.
This debate is a turning point. It marks the end of four years of this disastrous experiment in Tory freedom—the epitaph in the words of our Amendment which, as the Chancellor said, we took from him. I must say this, not lightly or in any party sense: this Government have already lost the confidence of the nation, even before they begin to take the measures that are necessary to deal with the crisis. This crisis, even if its monetary effects are temporarily postponed, is still with us, and it cannot be solved by a discredited and, I believe, a divided Government.
There is more than any question of economics or even of social justice and living standards involved in the issues which we are debating today and tomorrow. Some of us on these benches had the great privilege of working with the late Sir Stafford Cripps. To him, the economic problem of the country was not simply one of trade or payments.
It was a moral issue. I am sure the whole House, and certainly the Chancellor, will agree that to overcome this crisis we shall need more than material aids or 'material ingenuity. This is a moral challenge to our people and certainly the

need to overcome it goes far beyond any question of mere financial solvency.
The whole House, perhaps for different reasons will agree that this nation indeed the Commonwealth, represents in world affairs something more than a mere economic or trading unit. Since the war, with the message of hope which this country gave to Asia in 1947, it has represented a third alternative to the extremes of Imperialism, on the one hand, and Soviet Communism, on the other hand; "The Middle Way," if the Chancellor will permit the phrase.
The other two great powers are expanding fast. The United States has a great, broad, industrial base which permits it to withstand waste. The Soviet Union, with its five-year plans, has announced a formidable and terrifying programme of economic expansion, with a great expansion in technological education, to which the right hon. Member for Woodford rightly drew attention. I am not suggesting that we need be frightened about this in terms of military power, but in terms of industrial power it is a formidable undertaking.
This country is lagging behind in production. We reject the Soviet methods. We reject the American methods. But this country is lagging behind; our production increase is limping year by year and, while those two nations are expanding their industrial base, we are confining our increases in the main to some of the frivolities and inessentials which this country cannot at present afford.
Without economic strength the voice of this nation will be muted, nor shall we have the means of helping nations less fortunate than ourselves if we have no surplus to pour out to them. That is the issue before the House in this debate, and it is in that spirit that we put forward the Amendment.

5.52 p.m.

Mr. Alan Green: In asking for the indulgence of the House this afternoon, I do so with particular diffidence. First, this is a debate in which we can expect, and have been warned to expect, emphatic feelings to be expressed in equally emphatic words. Secondly, there must be many learned in economic matters, Mr. Speaker, who seek to catch your eye.
None the less, I have two reasons which encourage me to be on my feet this afternoon, and the first is the generosity and toleration which I have already observed to be extended by the House to those who speak here for the first time. The second reason is rooted in my constituency. My constituents earn their living by very diverse means. About 40 per cent. of them are engaged in widespread textile and engineering activities. Preston, of which the division of Preston, South is part, is a thriving port and an important railway centre, and it has substantial food production within its boundaries. It is a very famous, indeed an ancient, administrative centre. It is, perhaps, therefore not inappropriate that it also boasts a paper-mill.
For those two reasons, but particularly for the wide range of activities in which my constituents earn their living, I am encouraged to believe that it is by broad, general, sound economic principles and policies that the interests of my constituents will be best advanced rather than by concentration upon one particular industrial interest or upon one selected administrative method.
We have heard already this afternoon—and perhaps this is an encouraging feature—that we face, and both Socialist and Conservative Governments have faced, a problem different in kind from that which we faced before the war. Then we had an economy lagging in a stagnant world. Now it is an economy overstrained in a changing world.
I believe that Governments of both parties, together with all the people, can take some credit in the circumstances—indeed, considerable credit—that we enjoy today more prosperity more widely spread than ever before in our history. I believe that we can take this credit in particular for a reason which has not so far been mentioned in the debate. When we entered the new post-war scene we did so with an economy more highly developed already, perhaps more fully expanded, than any other industrial nation in the world, and just because of that high degree of development it has been correspondingly more difficult for us to change rapidly the kind of work we do and, perhaps, the pace at which we do it. That, I suggest, is still a most important factor for us to remember. Indeed, it encourages me to repeat the

thought that we do ourselves less than justice if we pretend that we have no prosperity at all.
Our problem has been to change an already highly developed economy in a world which is changing very rapidly in the kind of demands it makes upon those who are able to export industrial goods and materials. It is a difficult task. I believe it not appropriate to suggest that we compare unfavourably with a nation such as Western Germany. We were not so overwhelmed in war that we were forced to start afresh. We have not had, as Western Germany has had, a steady influx of new, young, skilled Germans with whom to support an expanding economy.
By the same token, we are not like the United States or the U.S.S.R. in that we are not in a position to exploit large-scale mining and still undeveloped natural resources. I am certain that we have had a harder task, and this I apply to both Socialist and Conservative Governments, to change and keep our economy in phase than have most of our competitors and most of our allies in the world. We have had to do it under the burden of the cold war and while carrying our responsibilities for maintaining order and advancing freedom on a world-wide front.
I do not believe that we have anything of which to be ashamed, but it is vitally necessary for us now to take stock of the position we have reached and to take certain specific action which I will mention. According to both sides of the House, our spending in total is too high. Our spending is made up of two main elements—investment spending, whether it be for social or economic purposes, and current consumption. I believe that there is no disagreement on that particular point. This has been the case since the end of the war. It is not a phenomenon of the past twelve months. We can see how the curve of our gold and dollar reserves has moved, now going up and now going down, but generally, over a long period, drifting down since the end of the war. We should not make a party point about that.
What I am certain has been missing in our economy—and it is clear to all of us that this is the case—is a sufficient supply of fresh savings each year to finance the total of investment spending that we have


sought to make each year. That is the central problem which neither our predecessors nor the present Government have so far fully solved. Many attempts have been made to bridge that particular gap in savings. We have tried all sorts of methods.
Governments—and I use the word Government as a non-party expression—have tried physical controls, including direction of labour. They have tried an investment levy and investment allowances. They have tried devaluation to make our imports more expensive and our exports relatively cheaper. They have tried freezing the economy, and they have tried unfreezing the economy. These and many other methods have been attempted by varying Governments of one political colour or another. At times, each has had a temporary success, and for moments or for twelve months the gap has been narrowed, but has then grown again.
It is because at no stage has any Government of whichever party succeeded for long enough either in evoking savings to finance investment spending, or in curbing their own expenditure to bring down that expenditure to equal the savings which they could evoke, or, thirdly, perhaps, a combination of those two methods, that no Government has succeeded in that central task for a long enough period of time.
I am not sufficient of a technician to be able to state with any certainty at all what price we shall now have to pay to evoke the savings we need if we are to maintain the high rate of investment which I believe is essential for us, but I am quite certain that until the past twelve months a sufficiently high rate has not been offered to investors and savers to encourage them to cut their current consumption in the interests of their future needs. I am certain that that is the one continuous and constant failure common to both parties over this whole post-war period.
In the past few days, I have been encouraged by the Measures proposed on a wide front of our economic activities to believe that again we are turning in the right direction, and that we are going to continue to avoid excessive bureaucratic controls, of which in my previous experience outside this House I have had unpleasant and effective experience. I am encouraged to believe that we are now

going to evoke more savings by paying, in other parlance, "the rate for the job," because unless we pay "the rate for the job" in savings, as we should do in regard to labour, management and all the other of our activities, we shall not evoke the savings.
I trust that in future we shall evoke them, and I trust that the Government will play their part by restraining themselves in precisely the same way as they are asking the public to restrain themselves. I am encouraged by the announcement of my right hon. Friend, and I trust that, in the sense in which we use this term in this House, I shall continue to be a friend both of my right hon. Friend the Chancellor of the Exchequer and his immediate predecessor.
I believe I have exceeded my limit. May I return to what I said at the beginning and thank the House with real sincerity for its indulgence on such an occasion as this, with my apologies to it if I have delayed its progress too long?

6.5 p.m.

Mr. H. Rhodes: May I congratulate the hon. Member for Preston, South (Mr. Green) on his speech? The hon. Gentleman represents a very proud town, and he himself can take some pride in the way in which he delivered his speech as a representative of that town. I understand that he is connected with the textile industry, which, in his town, is in the middle of a difficult time, and I hope that all the time the hon. Gentleman is here he will fight for the survival of the industry that he knows.
When the Chancellor was referring to the pre-war situation this afternoon, he reminded me of a couple of society dames who went to Oldham just before the First World War to do a bit of slumming. After they had walked around Oldham back streets, one said to the other, "My dear, do these people actually love like we do?" We on this side of the House do not need telling by the Chancellor of the Exchequer what those dark years between the wars meant to us in the textile industry. We do not want to rake that up, but the right hon. Gentleman did so this afternoon. I will leave that matter there.
Before I come to my main point, I would say that I think the Opposition are perfectly justified in tabling our Amendment this afternoon, when we examine


the record of this Government during the last eighteen months, beginning with the hire-purchase restrictions being reduced in August, 1954, going through the boom of 1955, when false values were placed upon all equity shares, representing little in the way of true production or value to the economy of this country, up to the present time, when these ridiculous measures relating to the bank squeeze have had to be brought in. We recall the measures which the Government have put into operation during the last eighteen months, such as the denationalisation of this, that and the other, and the effect on the economy in one way or another.
Here are a few figures to show what has happened in the steel world. I take first the case of Stewarts and Lloyds' £1 ordinary shares. The concern was denationalised on 25th June, 1954, and the total number of shares sold by the Realisation Agency was 10 million. The price per unit share obtained by the Agency was 35s., and the total value of the equity when sold by the Agency was £17½ million. The price paid on denationalisation was 34s. 9d. If we take 100 as an index for the price at the date of denationalisation and carry it forward, we find that the price on 2nd February, 1956, was 68s. 10½. and the index was 198—an increase of 98 points. I shall not weary the House by reading more such instances, but I have many of them here.
I ask seriously whether there is no element of inflation when, in eighteen months, the price doubles after the resale to the public by the Realisation Agency. Of course there is; it is full of it. Only the other day there was criticism by the President of the Manchester Chamber of Commerce, who was accusing the spinners of Lancashire of doing the same thing in another way. He was saying that in 1955 they paid the same dividends as in 1953 and 1954. He drew the comparison that in 1955 the spinners' activity was 65 per cent. compared with 100 per cent. in 1953. Is there no element of inflation in that? Of course there is. That is the sort of problem that has been neglected by this Government during the last fifteen or eighteen months and now they are reaping what they have sown.
This afternoon my right hon. Friend the Member for Huyton (Mr. H. Wilson) drew attention to a principle which was enunciated by the former right hon.

Member for Aldershot, who was then Mr. Oliver Lyttelton. That right hon. Gentleman said that the manufacturer did not need to be told what to make; he decided whether to make motor cycles or umbrellas. If he could make a profit on his product after paying 5 per cent. to the bank he could make as much as he liked and what he liked, without any question whatever that that was the way to run an economy. We are paying for it today.
I want to draw the attention of the President of the Board of Trade to a few personal views on this matter, if I may be pardoned for mentioning them; and I ask the indulgence of the House. I have devoted many years to the establishment of a business in the hope of being able to compete in any market. It is an ambition that can be applied to dozens of other people. They are keen, energetic, enthusiastic to create competitive businesses. I am speaking for them. Each year they are "ploughing back" and creating the wherewithal to compete better.
It sounds like a platitude, but its true. After pursuing that policy for years and years, my firm is, for the first time since the war, competing with the Italians. We are taking up that amount of imports which has been coming in since the war. The President is quite aware of that. I ask, is it valuable? Was the capital investment we made good or bad? We doubt whether it is or not. Can we be told whether investment put into the consumer goods industries is a valuable thing or not?
I appeal for a more imaginative approach to this problem. In an economy like ours, dependent as it is on the export of goods, surely there are some rules, based on information available to the Treasury, which would put in train remedies to meet the circumstances of the time instead of letting them drift for months and months. How long have the Government been crying stinking fish about the British economy? For the last twelve months they have been telling the world that we are likely to be priced out of markets overseas and that every time we utter warnings or exhortations we are doing some damage. I am not saying that is not necessary, it is necessary so long as the Government act with speed instead of dawdling and showing how ineffective they can be with the bungling


ways we have experienced in this House during the last twelve months.
Another aspect which affects us in Lancashire and affects any person intelligently engaged in a manufacturing business is that if we have a break now in investment either for buildings or capital equipment, we shall never make it up. It takes a lot of impetus to get investment going in the private sector of industry. We know that. It is not more than eighteen months since the former Chancellor of the Exchequer was complaining about it.
It seems a travesty of modern economy that now we have the credit squeeze and the monetary policy which is spoken of in this fine language of ours, yet only four months ago it was possible for anybody with a bit of security—such as a house—to go to the bank and borrow money to invest in stocks and shares. Is that not barmy? Of course it is. If we are so ill-prepared, if the principles on which we work are so flimsy and insecure, it is barmy. Now one could have difficulty in carrying on a legitimate business and exporting to Canada, or even to America, because there is no discrimination.
Unless we leave a legacy of first-class machines to the next generation or build up a machinery industry in which every few years something better is coming along, we, in our day and generation are neglecting our duty. Is it not reasonable to assume that an intelligent country like ours, backed up as it is with good brains and experience over the years in engineering products, should ask that the Government should be making plans whereby a manufacturer can obtain machines capable in advance of the popular figure of 3 per cent. increase in production? If the popular figure is a 3 per cent. per annum increase in production, I say that machines should be available to the manufacturer so that he is able to increase his productivity and production by 30 per cent. ten years in advance. That is not unreasonable, but it has to be thought out in terms of the policy of the Government.
If it is the policy of the Government to make industrial relations stiffer let them forget it, because they will find that any gain is only temporary. We can look at the experience in other demo-

cratic countries which at present have unemployment to find an answer. The President of the Board of Trade knows Italy well. He knows that before the war employers in Italy were not able to dismiss anybody; their people had to be kept on. They worked at half wages. Since the war, the same thing has applied. The finest automatic machines in Italy have the same personnel on them as the oldest machine that can be found anywhere in Italy. That is what comes of it. There is no redeployment, there is none of this moving towards automation. The prospect of automation is gone if we cannot master that problem.
I ask the Government seriously to consider what they are doing. It might easily be, as my right hon. Friend the Member for Huyton has said, that they will walk backwards into unemployment. I do not for one moment believe that there was any deliberate determination by the party opposite in the years before the war to victimise the British working man, but I do believe that they did not know how they could get out of that trouble or how they got into it.
I am appealing this afternoon for a really determined effort on the part of the Government to acquire the information as to the lines on which our economy should work. I am perfectly certain that somewhere there must be a measure of agreement in terms of rules of conduct in our economic affairs that could be applied by one party or the other when in office. What happens to the fruits of production is another matter. We can argue and fight out between us on the Floor of the House the issue as to respective shares, but there should be no question about the rules that govern the ability to get the production. I leave that thought with the Government.

6.23 p.m.

Dr. Donald Johnson: I am conscious of the great honour that is mine in rising to address this House for the first time, all the more so as although this is an occasion that has been long looked forward to by me it has frequently seemed unlikely in my political career that it would be achieved. It has taken me some twenty years of unrelenting controversy, including five undoubtedly controversial Parliamentary Elections, to


reach this House. It is, therefore, not entirely easy for me to adjust myself to a non-controversial occasion such as this should and must be. I hope, therefore, that the House will grant me its indulgence if in any way I should go astray.
It is my most sincere hope that what I have to say will mollify rather than exacerbate the controversy in this debate, which is of such vital importance to the people of all classes of our country. It is with some feeling of temerity that I am embarking on an economic debate as a pure tyro in economics. My excuse, first, is the great sense of urgency of the present situation, and, second, that as one who has spent the major part of his life as a practising doctor, I think I can claim to know the people of this country perhaps as well as anyone.
My father, too, practised as a doctor amongst the working classes of the industrial town of Bury, in Lancashire, for some years. As soon as I was old enough, I was put in his trap—it was a horse and trap in those days—and taken with him on his rounds. The streets of that industrial town formed a background that is woven into my memories. I remember, as do so many others in this House, the back streets, the courts and the yards, and the squalor that often pertained to them—places that, fortunately, have long since been demolished. I remember, too, the children with bare feet. My only regret was that I was the small middle-class child who was not allowed to go in bare feet. I remember the bond of sympathy between my father and his patients, and I remember too the great kindness that was shown me by those same patients as a small boy.
I have found this same warmheartedness and kindness amongst the people of the constituency who did me the honour to return me to this House last May, and about which it is proper that I may say a few words. It hardly needs me to publicise the historic City of Carlisle, whose octo-centenary celebration is due in three years' time. As well as history, Carlisle has industry—biscuits, metal boxes, textiles, engineering and other things; and as well as industry, we have romance also as our background. Carlisle served as a refuge to Mary Queen of Scots. When one stands on the battlements of Carlisle Castle, one can see the road winding up the hill to Scotland which was the inspiration

of that famous lyric "Loch Lomond" and the "high road" to Scotland. We also have an experiment in State public houses, although it is better perhaps if I do not indulge in any comments concerning them on this occasion.
A special feature of our city today is that no less than two out of five houses in it are council houses and owned by the city corporation. In fact, we have two cities in Carlisle. The older city, down by the river, has very good houses and is remarkably free from slums, for our Carlisle builders are second to none and one of them, in fact, is a world-famous firm. We have a new city too, a city on the hills around, the corporation-owned houses to which I have referred. It is a pleasant experience indeed to go round the newer parts of the city and see the well-dressed children and the nicely-furnished houses. It is of these new standards of life and of the children who are to be our citizens of the future that I am thinking in the few words which I have to say on the subject of today's debate.
The crux of our discussion is the question of the rise in prices. Each one of us must, and does, interpret the economic situation through his own eyes. Economically, I am a small man. My only other occupation, in addition to being a Member of this House, is that of a small, independent book publisher. No one can accuse us small book publishers of making excess profits during recent years. The fate of many of us is only too well known. Nor am I personally affected by the credit squeeze. Indeed, my prudent bank manager has made it quite clear these many years that he would have nothing to do with a business such as mine.
Our costs have gone up from three to five times, but our products only about twice. Hence it was with a feeling of awe, and especial dismay, that I found among the first of my New Year's greeting messages a communication from my printer, of the sort that has become familiar. It was worded in the usual euphemistic language, to the effect that negotiations between the British Federation of Master Printers and of the trade unions in the printing industry had been going on in an endeavour to reach a new agreement. The heading of that document was, "Increases in Printing Charges."
At the bottom was the mention of a percentage increase in charges of from 2½ per cent. to 12½ per cent., with a hint that it might be 15 per cent. As a book publisher responsible for the end product, I have two choices. Either I can go out of business or I can pay these increased prices and put up my own prices to the book buyers, not only at home but also in the export market, which is even more important.
I do not pretend that my own small amount of business is of any great significance, and I mention it only because I know that it is an instance that can be multiplied many times over today. I am ready to acknowledge that there may be many factors contributory to this present crisis, and that it may be, as an hon. Gentleman opposite has said, that manufacturers have been only too ready to build up profits when they have found a ready market for their goods. Indeed, I have often accused my printer of doing that. Be that as it may, there is no question that the biggest single threat to cur economy at the moment lies in the pending claims for increases of wages and salaries.
I add "and salaries" deliberately, because the professional organisations, including, I acknowledge, that of the doctors, have not been slow to show themselves capable of emulating the trade unions in these new conditions of full employment we have been discussing. Looking at the whole picture, it does seem, in my very simple reasoning, futile for the Chancellor to take £50 million—£100 million, perhaps—out of the economy if five or ten times that amount is to be put back by wage and salary increases. This is the crucial problem which faces us.
My political record—my rather unsuccessful political record, to which I have referred—shows that at least I have been no supporter in the past of either national or coalition Governments. I believe that party politics are the essential breath of our democratic life. In this present situation there are obviously acute differences as to the method to pursue to cure our economic ills. Yet I believe it to be unfortunate if, in emphasising those differences, we lose sight of the unity of our national aim and object of retaining our standard of living.
The rise in the Bank Rate, I think I am right in saying, makes it the highest since 1931. I do not want to say anything about our very similar crisis of twenty-five years ago, but to recall the spirit with which the country received the announcement of the economies to be made in those days. It was one of united determination to get out of our difficulties at the cost of any personal sacrifice. One found retired people in the golf clubs discussing almost with relish the cuts in their salaries.

Mr. Shurmer: What about the unemployed?

Dr. Johnson: Even the unemployed accepted in uncomplaining fashion cuts they could ill afford. I was then a young doctor starting in practice and had a cut in the amount of the money for my panel practice, at a time when I could ill afford it.
I wonder whether we can, while retaining our political and economic differences, recapture that spirit now. The alternative is a grim one. I do not need to describe it in my own words. I quote the words of a far more distinguished person, Lord Beveridge, in his well-known book, "Full Employment in a Free Society":
Irresponsible sectional wage bargaining may lead to inflationary developments which bestow no benefits upon the working class, which spell expropriation for the old-age pensioner and the small rentier, and which endanger the very policy of full employment whose maintenance is a vital common interest of all wage-earners.
That is what was said by Lord Beveridge himself, the originator of the policy of full employment.
I believe that our people, and our wage-earners in particular, must realise that money alone is not real wealth unless it is matched by production; that it is useless—and I tell them this in Carlisle, for I am not afraid to say this to them—to have increases in wages if they are cancelled out in a year's time by rising prices; that paper money can on occasions become worthless and, indeed, not difficult to acquire. I have in my hand some paper money, representing the complete range of the German currency up to a million marks, bought for 2d. in Trafalgar Square, in 1922.
We believe that that sort of thing cannot happen here, but the danger is


that unless our nation meets this crisis in a spirit of real sacrifice that can happen here, too. This lesson can be inculcated only through confidence on both sides. We must have a standstill in dividends and wage claims for a time. That period must be used to work out a system of relating any subsequent increases in wages and dividends to increases in production. That must be done on a national rather than a sectional basis, because, of course, naturally, one cannot forget the bus drivers and people like that who are not active producers. In that way we can work towards a true co-partnership in industry throughout the country and retain the standards of life which are so dear to us.

6.40 p.m.

Mr. Donald Chapman: It is a singular pleasure to follow in the debate the hon. Member for Carlisle (Dr. D. Johnson), or the Member from the road to Loch Lomond as he calls himself. He asked for the indulgence of the House, but I am sure that he did not need it. He has fought many more political battles than I have, as he showed in his command over what he had to say. I sense that he was nervous, as every hon. Member is in making a maiden speech, but if he will allow me, as one many years his junior, I would tell him not to be deterred by the fears aroused by a first attempt.
One of the wonderful things about the House of Commons is that we all wait for the day when we have the: real attention of the House, with Members coming in to hear what we have to say. It is not an ambition that is not worth while. This House is the greatest assembly in the world, and I would say to the hon. Member, on starting along the road, that the goal is worth while. I congratulate him on making such a wonderful start, but warn him that we shall be controversial next time and that he will not get away so easily with what he has to say.
I want to speak mainly about one industry. The first results of the Government's policy, in the tangible form of levels of employment and full-time working, are probably being shown in Birmingham. There are between 5,000 and 10,000 men on short time in the Austin motor works, in my constituency. The figures went up last week, and I under-

stand now that there is very little likelihood that short time will soon come to an end. It is time that the Chancellor had a look at the impact, and the lesson of the impact, on the motor car industry of the Government's policies.
We in this industry are producing about one million cars a year. Now, by sheer investment, encouraged by the Government—and I do not object to it—we are producing 100,000 more cars every year, and the production advance is going on at an increasing rate. I am probably underestimating the extra number that will be produced this year. In this industry, with a production of one million increasing by 100,000 to 150,000 every year, one of the greatest producers, British Motors Corporation, responsible for nearly half of the country's total production, is already on short time.
The Chancellor should ask himself what will happen in that industry in my constituency in the latter months of this year and the early months of next year. We cannot sell the cars which we are producing now. They are arranged in rows on acres of fields round the factories. Next year, it will not be the case simply that we cannot sell these cars. The Austin factories will have 50,000 or 100,000 more to sell in a situation which the Chancellor is making worse on the home market by a deliberate act of policy, and in a world where, in the winter months, Australia and New Zealand, the traditional takers of our winter exports, are themselves imposing cuts and likely to continue to impose cuts throughout the period.
Will the Chancellor reflect on the fact that in the autumn and winter we shall not have 5,000 or 10,000 on short time in my constituency out of a total working force of 20,000 in the factory, but about 5,000 to 10,000 unemployed, probably for several weeks if not months? This is a cold statement of what is now almost inevitable in this section of the motor-car industry. People might say that there could be greater exports—and it is true that the industry hardly increased its export figures last year. Exports, out of the million vehicles produced last year, increased by only 7,000. It might be said that there is room for increased exports this year, but I do not see it in the present world market. I do not see the world market absorbing


any fraction of the 100,000 of increased production. Export is not the solution for a problem of this magnitude, given the present world export situation. In any case, the world export trade amounts only to one million vehicles, and I cannot see Britain grabbing as much as an extra 100,000 out of that one million.
I sense that the Chancellor had all this in mind when he spoke today and carefully covered himself by a quotation from the late Sir Stafford Cripps to the effect that full employment meant that people had to be willing to change their jobs. As I see it, that is the red light to the motor-car industry. The Government must take a great deal of responsibility. There was the increase in Purchase Tax by the Chancellor's predecessor, and there are the new impositions of hire-purchase arrangements and all the other measures which are deflating demand at home.
The Chancellor may ask why I object. He may say that one of the troubles is the position of British cars in the export market. We are being licked out of the markets wholesale by Volkswagen and cars like Opel, which are increasing in production at a considerable rate. Last year we sold in Sweden only half of the number we sold in 1954. The rest of the market was taken by the Germans. In the United States, sales of Volkswagen increased by five times last year.
Hon. Members opposite may ask, "So what? What is the Chancellor's responsibility?" I will come to that. I am not criticising the very admirable men who run the motor car industry in this country. In terms of managerial ability I do not know of any industry with greater talent in the whole of Britain. What has happened in the industry is a tell-tale lesson for the Chancellor. The industry has been encouraged by the Government's easy words about the way in which the import-export problem has been solved. It has been encouraged by Tory talk of absolute prosperity, of no dangers, of a free-for-all, of carrying on with everything bound to turn out well, with no restriction and little forethought, of just carrying on in any easy way that for the moment seems to pay. Encouraged by all that, the motor car industry is now coming up against its problems.
We in Britain seem to like a particular kind of car. It is typified by all the

models. They all look very much alike. Because it has been easy during the last few years to sell a good number in the export market and to have an easy time in the home market, which has been consuming cars at a rapid rate, we have made no real attempt to beat the foreigner. In air cooling, in types of suspension, and in other experimentation, the foreigner has a lead over us every time. That is why Volkswagen and others are taking the world market, from us, with the Renault and other foreign models following close behind.
Because of that easy time on the home market, and because people were led to believe that few balance of payments problems remained to be solved, we encouraged the industry to produce, by and large, one kind of car. The difficulty throughout the entire motor car industry is that this model is no longer a novelty on the world market and therefore no longer sells. So the Government are shown to have falsely encouraged the industry to be complacent and next year, when these models do not sell, it will be a case of standing the men off for a long time until the industry has revolutionised the model in the hope of capturing more of the export market.

Mr. Osborne: I follow the argument of the hon. Gentleman, but would he consider the following point? In the last two years men have left the engineering industry in Leicester for the Coventry motor industry, attracted by higher wages. If, therefore, the industry in Coventry and Birmingham is not so prosperous, many of those men can return to Leicester where machine tools are being made for export: so they need not be unemployed.

Mr. Chapman: That is precisely the kind of thing in which the party of the hon. Gentleman believes. Yet about £150 million has been invested in the motor car industry which can only be justified in terms of an enormously increased production. The hon. Gentleman is saying two things. On the one hand, he says that the men can solve the problem by changing their jobs—and that means new homes, travelling and all the dislocation that goes with it. On the other hand, he is taking no account of the money involved in that enormous investment programme which could be wasted. This position reveals the lack of planning by


the Government. Right hon. Gentlemen opposite have given no clear indication of what is likely to be our economic future, and the motor car industry is now bound to go through a period of painful adjustment to the facts of economic life which the Government have suddenly realised in 1956.
Now I come to an allied aspect of the problem, the dependence of the motor car industry on sheet steel imports. Here is another example of waste by the Government. Last year the industry was allowed to flourish on imported steel. This year, presumably, imports will have to be cut. Why have not the Government asked this and other industries long ago to get together to examine the position, especially since it was known that most of the sheet steel used on the home market car was being wasted?
I do not know what the President of the Board of Trade is muttering, but perhaps he will balance the industry's increased dependence on imported steel against increased exports. I should imagine that last year its net contribution to our balance of payments declined instead of increasing. If the right hon. Gentleman feels happy about that, he had better say so to the people in Birmingham who will be suffering from his policy.
I have said time and again that if the Government will not impose physical allocations on goods, they should meet the Opposition in a half-way house. The half-way house I have suggested was taken up by the Observer yesterday. I suggested that the Government should call together the main users of sheet steel, timber, wood pulp, rubber, and animal feedingstuffs. The Government should say to them, "If you do not cut your consumption of those commodities, we will be bound to cut them and you will force us into physical controls."
The Chancellor of the Exchequer has asked for self-discipline in our economy. What greater measure and example of self-discipline could there be than that? It would till a great part of our present gap. Last year the increased imports of those commodities alone amounted to between £100 million and £200 million. If the Government had approached the consumers concerned, that figure could have been reduced.
In my industry we have a clear example of the folly of the Government's policy, and this is the industry which will bear the brunt of it in the coming autumn and winter. As I have said previously, the Government have talked themselves into such a position that they could not use consultation and exhortation with big industry because they were against any form of physical limitation. The Government say that only the monetary mechanism, indirect measures, the hidden hand as it used to be called, must be used. Well, the hidden hand is rearing—[Laughter.]—its fist this year. Hon. Members can laugh, but I will complete my metaphor by saying that we shall be taking it on the chin in Birmingham. What will become discredited is the ability of the Government to be flexible on these matters.
We could have a situation in which, without using the physical controls which I and my hon. Friends would like, the Government could by exhortation by example, by calling industries together and getting them to ration themselves voluntarily, solve a great deal of our economic problems. Up to now the Government have washed their hands of this, and I can only say that if my constituents next autumn and winter are marching in a dole queue, they will be walking over the grave of the present Chancellor of the Exchequer, and they will be thanking not only the right hon. Gentleman, but his predecessor who set these things in train. I hope it will not come to that, because I hope there is still time for changes of policy.

6.58 p.m.

Mr. Clement Davies: I am grateful to you, Sir, for calling me immediately after the hon. Member for Northfield (Mr. Chapman), who has directed the attention of the House to the condition of the motor car trade. Apparently what he is asking for, in the belief that it would solve the problem, is that the Government should adopt a policy of complete physical controls which only the hon. Member's own party favours. The hon. Gentleman seemed to supply part of an answer himself, in referring to another matter to which I should like to call the attention of the House.
The hon. Gentleman referred first to the cut in imports of motor cars into New Zealand and Australia. That is an example of direct Government interference both here and in those countries. Only about a week ago I listened to a moving speech by the High Commissioner for Australia, who is admired and liked by his many friends in this country. He pointed out that although there are only 11 million people in Australia, that country is still our biggest customer by far, bigger than any of the larger countries or the dollar countries. He said, however, that Australia had now reached the position where she could not buy from Britain as much as she would like, especially motor cars and machinery, because Britain would not buy from her. That is an instance of Government interference, either directly by control or indirectly by manipulation through tariffs—

The President of the Board of Trade (Mr. Peter Thorneycroft): If the right hon. and learned Gentleman will give way for a moment, I can assure him that there is no interference with our trade with Australia. Everything is on open general licence. There is no tariff manipulation and there is free entry for our goods.

Mr. Davies: There is the difficulty that Australia is not able to sell here what she can produce, namely, wheat and wool. In return, she is anxious to buy as many materials as she can. These are the things that she has to sell to all in the world, here or anywhere else, and there are these restrictions put on them by various Governments.

Mr. Thorneycroft: The right hon. and learned Gentleman talks of restrictions. There is no restriction on the sale of Australian wheat or wool or any other Australian commodity. The right hon. and learned Gentleman is the Leader of the Liberal Party, and he can hardly complain if free trade principles are applied.

Mr. Davies: It is the other way round. I am anxious that there should be complete free trade in every way. That would be the answer.
The second point which the hon. Member made was that our car exports are now being beaten by motor cars which are being manufactured everywhere on the

Continent, because the cars manufactured there apparently meet the needs and wishes of the consumer much more readily than those which are produced here. What is to prevent the manufacturers in this country being able to compete in design, in materials and in every other way with other manufacturers, wherever they may be? Hitherto, we have never had any fear whatsoever of competition from anywhere.
There is one other possibility with regard to the lack of markets for our exports. It may be that we have got ourselves into such a condition that we cannot compete in price with goods manufactured in other countries.
I now turn to the speech of the right hon. Member for Huyton (Mr. H. Wilson). Anyone listening to the right hon. Gentleman might have thought that the situation into which we have got ourselves was something entirely new, and that we have had, not merely periodical crises, as we seem now to be having, but annual crises from 1945 onwards. [HON. MEMBERS: "No."] There were. In the first place, there was the assistance given in 1946 of £1,000 million to help us out of our difficulties. Even then we got into difficulties and the money was soon exhausted.
Then there was the assistance given by Marshall Aid. Again, we got into difficulties. One would think that no one on this side of the House had ever heard of the extraordinary measures which had to be taken in 1949, when the £ was devalued. That is the kind of difficulty which we got into during the period from 1945 onwards.
There was, of course, the trouble that for six years we had been unable to build new factories, to put in new plant and new machinery. There was the war. The result was that we could not keep production up to the amount needed, and it lagged far behind the purchase money available in the country. It was the right hon. Member for Bishop Auckland (Mr. Dalton) who invented the phrase—to show us what inflation was—which has remained with us ever since, namely, too much money chasing too few goods. That definition is perfectly correct, but we certainly thought that by this time—ten years after the war—we should now be running on a more even keel.
Wages, of course, have gone up; so they have in all other countries. I do not


think that the ratio by which wages have gone up in this country is any greater than in the United States, Canada or the Continental countries. What has happened here is that productivity has not kept pace with rising wages, as it has in those other countries. That is our main trouble, with the result, of course, that there is a surplus home demand. That has several effects, including the very vital one from our point view that it attracts goods from the export market into the home market. With rising prices, people are competing for goods here, instead of holding off and encouraging manufacturers to find scope abroad. That is really what has been happening here.
I will come later to the Government's policy with regard to investment. Unfortunately, it has had the result that although investment has taken place, it has been made, not out of savings, but largely out of reserves. That has meant that we have got into trouble with our foreign markets, so that all the time our reserves are going down and we are in debt to other countries. That is the position.
All the time, on both sides of the House there has been a cry for the lowering of prices, a cry of, "Let us get the costs down." I do not know how much the Government can interfere, in the ordinary event, to bring down costs, but what has been happening is that they have maintained legislation and restrictions which have had the effect of raising prices and keeping them high.
Both sides of the House, ever since 1931, have been in favour of tariffs. That is one form of restriction. That is a protection to prevent outside competition, and it has resulted in our doing less work, with less effort and with less initiative to find any new ideas which will help us abroad. Industrialists have had the same or greater profits. Then it is complained that prices are too high.
That is one side. In addition, it is amazing to find that most monopolies and restrictive practices have come into being since 1931. There were very few of them prior to 1931. They have increased enormously since then. There have been combines and price restrictions of all kinds. What is happening? It has been known that their effect is to restrict competition and to keep others out of the market. Prices have been agreed which can be

obtained without any fresh effort. The Labour Government thought this was wrong and introduced an Act of Parliament in 1948, which they now admit was futile. [HON. MEMBERS: "No."] Ever since they have been in opposition they have been asking for a better Act.
Now I am waiting for the Bill of the right hon. Gentleman. I do not think that that will help. How many years will have to elapse before it becomes effective, before these cases are brought before the new tribunal which is now being set up? With price rings still continuing and with people taking advantage of them, no wonder the provisions of this Bill will have such a mild effect on the industrialists of this country who indulge in such practices—especially when one sees that there are sixteen separate bolt holes from which they can evade their duty towards the public.

Mr. Speaker: The right hon. and learned Gentleman must not anticipate the discussion of a Bill which is now before the House.

Mr. Davies: I am not doing so, Mr. Speaker; I am merely giving an instance of the kind of restriction which is undoubtedly having its effect upon maintaining higher prices.
I have mentioned the restrictions which the industrialists like to have for their own protection. Then there are the ones which the trade unions still operate. There was much to be said for them during that cruel period when we had such a vast army of unemployed. We all remember those terrible, dark days. All I would say is that at that time very little was done, either by the Labour Government of 1929 or the Coalition Government afterwards, to remedy the situation. Why should those practices be continued today? Why should there be all this trouble about a man doing more than the average amount of work being done by his mates, and matters of that kind? I am sure that all hon. Members would say it is time that such practices were done away with, in order that we might be able properly to compete with other countries.
All these practices are dictated by fear—the fear that there may come a slump, and unemployment. I cannot see any grounds for any such fear. [HON. MEMBERS: "Oh."] Why should there be, with


250 million more people in the world today as compared with 1945? Not only that, the standard of life is rising everywhere in the world.

Mr. H. Boardman: Is the right hon. and learned Gentleman aware that between 1920 and 1940 we never had less than 1 million unemployed? For a large part of that time we had 2 million unemployed. But the world was never short of people in those twenty years.

Mr. Davies: There is now a determination to maintain standards of life, and the demands upon manufacturers throughout the world are increasing. I cannot see any reason why there should be any fear.
I agree with what the right hon. Member for Huyton said about investment. It might be the most disastrous step ever taken by any Government—to curb investment in order, momentarily, to get over a difficulty, thereby mortgaging the future of the country. The right hon. Gentleman mentioned Russia. Tremendous strides have been made not only in America and in Russia but in smaller countries. New plant and new machinery are coming into being not only in Europe but in Japan and even in India. Are we, who are so dependent upon our manufactures and exports, going to fall behind any one of those countries in the world markets?
If we do, it will mean complete disaster for us. We are already maintaining 50 million people upon a higher standard of living than that of any other people in the world—even including the United States. I believe that our people have a better appreciation of what is good and best in life than have any other people. We cannot possibly maintain even half that number of people unless we increase our exports, and we cannot do that unless we have the factories and the plant and machinery, as well as the men, in order to take on the rest of the world. The tragedy is that the £ is steadily decreasing in value. It has gone steadily down in value since 1939. A few days ago an hon. Member put a Question asking what was the value of the £ today, assuming that its value on 1st January, 1946, was 20s. The answer was that it is now 11s., and it is still falling.
The right hon. Gentleman said that half the trade of the world was still being done

in sterling—but many of us remember the time when the whole trade of the world was done in sterling. It was the currency upon which all countries depended. By trading with every country we were able not only to establish our credit, but also to establish ourselves in such a position that we came through two world wars. I am anxious that no restriction should be put upon our freedom. Our industrialists can beat the world if we leave them to fight their own battles and restore the credit of this country.

7.15 p.m.

Mr. Douglas Glover: I am very pleased to be able to speak immediately after the right hon. and learned Member the Member for Montgomery (Mr. C. Davies), because his views upon free trade might be sound ones if we had sufficient reserves at this moment to be able to overcome the consequences. As we have not got those reserves, it is a completely theoretical argument. I shall refer to it later in my speech.
I was also impressed by what the right hon. and learned Gentleman said about both parties in this House. When the right hon. Member for Huyton (Mr. H. Wilson) was speaking this afternoon, he almost convinced me that the whole history of the Labour Party in office had been a bower of roses of success; that there had never been any financial crises or any trouble at all, and that in fact they were dealing with this problem dressed in a white sheet. The fact is that neither party has solved the problem of our balance of payments or inflation in a full-employment economy since the war. The sooner we look at this problem rather as a council of State than as two independent parties the better it will be for the nation and the more respect both parties will receive.
If we do not overcome the problem the result will be complete and utter disaster. When I was a schoolboy I remember thinking that I was going to become very wealthy on one occasion. I read an advertisement in a newspaper offering 10,000 Russian roubles for 7s. 6d. I was quite convinced that after the Russian Revolution had settled down 10,000 roubles would become worth a great deal of money. I became very disillusioned; I soon found that those 10,000 roubles were worth nothing. Two years later, in


the early 'twenties, my brother went to work in Paris. One of my hon. Friends, in his maiden speech tonight, referred to the fact that one thousand marks were and that was not worth one penny.  me from Paris a 10 billion marks note,
As the right hon. and learned Gentleman said, if in 1946, the £ was worth 20s.—a debased 20s., of course—it is today worth 11s. What it is worth compared with pre-war I do not know, but it cannot be much more than 5s. What is the reason for that? One reason is that in the redistribution of wealth the wealth has been spread more widely; and whereas if one man formerly had £10,000, after taxation he might have been able to live very well and save £5,000 per year, which went into the capital accumulation of the country, if ten men earn £1,000 each today the saving is nonexistent, as they spend it all.
We have given not nearly sufficient thought to providing attractive incentives to persuade people to forgo consumption this year and save their money for the future. I ask the Chancellor of the Exchequer to think out afresh the problem of savings. Could not a complete reorganisation of the Savings Movement provide a greater incentive to saving? Could not the trade unions help in this matter? Each year we get demands for wage increases. I do not blame the trade unions in the slightest degree for asking for wage increases, but it is a pity, although I accept the reasoning behind it, that those increases have not been backed by increased production.
Trade unions and managements together might evolve a system, like that which was worked out in the General Motors Corporation, in America, for a guaranteed standard yearly wage, and to forgo immediate increases. That would remove the accumulation of demands upon consumption and ensure greater security. It is our job to make these suggestions in the hope that the people responsible will carry them out.

Mr. George Darling: Is the hon. Member not aware that the majority of employers will not speak to trade unions on those terms? They will not allow the trade unions a voice in managerial problems.

Mr. Glover: This is a wage problem and not a managerial problem.

Mr. Darling: We cannot separate them.

Mr. Glover: I think we can. I do not wish to go into that point at too great a length.
My next point may be very unpopular with the Opposition. It concerns rent. I know what humble beginnings mean, just as much as do hon. Members on the other side of the House. In my young days, and in the days of my father, householders expected to pay about 20 per cent. of their incomes in rent. It was not the Labour Party that brought in the Rent Restrictions Acts in the 1914–18 war. These have continued with greater or lesser effect to the present time. If rents had increased in step with the fall in the value of the £ every family would accept something like that proportion of income to go in rent as perfectly reasonable.
Any move in that direction would be most unpopular, yet, unless we get a better balance in that respect, we shall always have an excess of demand for consumer goods. If a vast capital outlay on our buildings does not bring in a sufficient return on the capital invested, we should all be careful how we criticise any steps taken to put rents more into balance with our present consumption and with the basis of our economy.
I must refer to Government expenditure. It is just not right for the Government to expect all the saving and hardship to be on the part of the nation unless the Government show that they are cutting out waste. I am not impressed with the selling of paint that went on the other day, although I can understand it. How do Government Departments justify the sort of thing that is going on? In the case of the Navy, there are 33,000 civil servants compared with about 8,000 in the 1930s, although the Navy is less than half the size it was then, with less than half the ships. I do not believe that the public approve of that. It is "Parkinson's Law," or perhaps the sons and grandsons of "Parkinson's Law," in operation.
The credit squeeze is, by and large, serving its purpose. I am not an economist, and I have never been quite able to understand why we should have a credit squeeze while the Government continue to create credit. Surely it would be right and proper for the Government of the day, even though the interest rates might be high, to fund £1,000 million of


the floating debt and so remove that amount of credit from circulation.
I believe, as Lord Aldenham, a bank chairman, said the other day, that we should reduce credit to the level at which the banks have instructions to keep a liquidity ratio, say of 32 or 33 per cent. Then, if I went along and asked for money, the bank manager would say, "I am sorry. I should like to lend it to you, but we have not got it." In those circumstances it would not be necessary for the Treasury to issue a directive, because each bank manager would be able to lend money where he thought there was a safe commercial risk; in other words, to do his job as a bank manager and not as a civil servant.
I have no ill feelings today over nationalisation, but I cannot help feeling that in nationalised boards, particularly in the electrical industry, there is much lax administration, particularly on the retail side, and waste.

Mr. Chapman: Would the hon. Gentleman be good enough to look at the figures in this matter? There is a very common misconception about the amount that goes into administration in the nationalised industries. The figures are really minute, and in many cases are below those of the private enterprise from which the industries were taken over.

Mr. Glover: Perhaps that may be the experience of the hon. Member, but there are cases in my own area of offices which, before nationalisation, were run by a manager and a staff of three and now have a manager, an under-manager and a staff of 25. Those people are there and are seen by the public. I only ask that such cases should be looked into.
In turning now to restrictive practices, I do so without any feeling of animosity to any trade union. If I were in a union I should be most interested to see that none of those protections—as I should regard them—were removed. The matter was exemplified in a far better way than I can hope to achieve by a cartoon in the Daily Mail last week under the heading of "Sacred Cow." Any hon. Member who has not seen it should have a look at it. It shows, as so often happens in the United States and Canada, two cows on the railway line, one marked "Employers' restrictive practices" and the

other "Trade union restrictive practices"—or something to that effect. The guard is running up the line and the engine—marked "The British Economy"—is blowing off steam. The cow marked "Trade union restrictive practices" is saying to the other:
It's you, dear, they want to move.
That indicates the complete answer to the problem. It is not much use getting one cow off the line if another remains on it. I think that greater thought could be given at this moment to the removal of those restrictive practices. [HON. MEMBERS: "Which ones"?] We are already dealing with restrictive practices on the employers' side, and I think that, as a quid pro quo, the attitude of mind of the trade unions should change.

Mr. Ellis Smith: Give some examples.

Mr. Glover: I have taken quite a long time, but I must refer to defence expenditure. I am not for one moment suggesting that this country should abandon its obligations, or that we should do away with National Service or anything like that, but I was interested when my right hon. Friend this afternoon said that defence and all other expenditure was to be reviewed all through the year. To me it seems that the issue we have to face is this: is it of much use being an ally in N.A.T.O. and the other organisations if, at the first shot, we go bankrupt? Is it not better to spend slightly less each year, have a sound, stable economy and so be a reliable ally? I hope that that matter will be looked at in that light.
During the last ten years we have spent an enormous amount on capital development in the coal mines. That expenditure was necessary, but I wonder whether we could not have got quicker results had, say, £100 million been spent to develop coal production in East Africa. It would have saved the dollar coal imports which we are undertaking at present. On all sides of the House we make a great cry about wanting to raise the standard of living of the native African people, but it is intelligent self-interest to deal with coal production in East Africa as a matter of urgency.
The Chancellor's present measures go a long way towards overcoming the problem we face. Although I understand


his difficulty, I think it is a pity that those measures could not have been produced at the same time as his Budget, because it means that we now get a rather lopsided picture. I want to impress on my right hon. Friend my belief that it is absolutely essential that by the time his Budget statement is made the nation and the whole world should be conscious that the Government's proposals are good and sufficient to tackle and beat this problem. As a nation—this is not a party but a national matter—I do not think that we shall have the opportunity to regain the confidence of the world in time unless that is so.
I therefore ask the Chancellor to err on the side of severity in his April Budget. We have to make quite certain that we convince the world that Britain is going to put its house in order and re-establish itself on a firm base before making its next stride forward to prosperity.

7.36 p.m.

Dr. J. Dickson Mahon: I crave the indulgence of the House for this my maiden speech. I am deeply conscious of the difficulty of adequately following the late Hector McNeil as Member for Greenock. Hector McNeil enjoyed the respect and affection of many hon. Members on both sides of the House, just as he enjoyed that of his fellow countrymen. Of the twelve hon. Members who represented Greenock since the passing of the Reform Act of 1832 he was, to my mind, the most outstanding. In ability and accomplishment he had no rival, and in his gift of warm and human friendship he certainly was unsurpassed. The many things that he did for Greenock will not be forgotten by its people. Perhaps more than any one man he was responsible for bringing to the town, formerly dependent on a few basic industries, the new factories which represent the hope of that diversification which alone can give Greenock the economic viability and prosperity which is its undoubted due.
For my part, I am grateful that, in a short life, I have worked at the coal face and have also been trained in the practice of medicine. Because of that, I have an appreciation of our divided society, of the attitude of men to men and of the barriers between them. I look forward to the day when the barriers will no

longer exist and when we shall all live in a happier, more united, and more contented society.
Many ex-Service men are deeply grateful to the late Ernest Bevin and those of his colleagues who, at the end of the last war, established and sustained a scheme for further education and training which gave many of them the opportunity to develop their God-given talents—an opportunity which, in less happy times was not given to all.
Despite the fact that I am the thirteenth Member for Greenock, I count myself very fortunate in having been chosen by the electors to serve them in Parliament. I am conscious of that great honour and shall seek to live up to it as best I can.
I think of Greenock as the industrial barometer of Scotland, but not the simple type of barometer. The name "Greenock" is, in fact, a derivation of two Gaelic words meaning sunny bay, and the subtlety of Scottish and Celtic humour will be appreciated when it is known that Greenock has one of the highest rainfalls in Scotland. As you will know, Mr. Speaker, when the nations were lined up to receive the gifts of the gods, the Scots, the Irish and the Welsh were given humour. The English, being first in the queue, got compromise.
Greenock is an industrial barometer, for whenever the nation is ill unemployment in my town rises, and whenever the nation is relatively well unemployment falls. In my town one-third of the people have been unemployed at one time or another in the unhappy years—years which I do not recall and which thousands of my generation do not recall, yet they are years which testify to the tragedy into which our nation can fall even today. We are lucky at present. Founded on a broad basis of shipbuilding and engineering, woollen manufacturing and sugar refining, we have added the production of coal-cutting machinery and business machines. We have an unemployment level which is the lowest we have ever enjoyed. Greenock is conscious of its contribution to the nation's economy. It looks to new development in its factories. It looks to a new graving dock. It looks with hope to the future. However, we see our economy, slowly but surely, beginning not to expand but to halt.
I realise that I cannot be controversial. It is not in my nature to be non-controversial, and, therefore, hon. Members will,


I hope, excuse me if I find difficulty in this unusual rôle. But I seek—and I am sorry the Chancellor has left the Chamber—to make a small contribution for the record, for, after all, I am at the heights of objectivity—an unusual place for me. Up to now the record, I submit has been misrepresented. The Chancellor referred to the Co-operative Branch Managers Journal. I was delighted at the image which was conjured up in my mind of the Chancellor sitting in his office reading the Co-operative Branch Managers Journal. It is not a journal which is renowned in Co-operative circles, in the sense that we do not all read it. A few branch managers read that journal, but, as far as I am aware, it neither has a large circulation in the Co-operative movement nor does it speak for the Co-operative movement.
I do not intend to enter into a controversial discussion, but I would draw the Chancellor's attention to another more representative journal of the Co-operative societies. The Co-operative movement, I think, would not disagree that the periodical from which I hope to quote has a greater claim to represent the voice of the Co-operative movement. I have here the Co-operative Review, which I do not think hon. Members could challenge. In this publication—and I am not taking sides; I am being highly non-controversial—are to be found sentiments with which I do not associate myself and from which I do not dissociate myself.
In the May issue of the Co-operative Review these words are to be found:
Part of the speculation has arisen directly through the decontrol of commodities and finds its stimulus in sky-high prices of foodstuffs which, under Labour's wise rule of fair shares, were kept strictly within bounds by subsidies to housewives.
Or is this a comment which might square up to the view expressed by the Chancellor, from the same page:
The worst aspect of the present price racket is that (as repeatedly pointed out in the Co-operative Review) the people who are least able to hold their own are those with the least effective purchasing equipment—old age pensioners, widows and people with large families. These were the people who were protected by Mr. Attlee's fair shares policy; for prices were kept steady by payment of Government subsidies to lower the price of all essential commodities.
Here speaks the Co-operative movement.
Here is another, from the November issue—I put this in for the sake of the record—and I know that the Chancellor will pick this up just as readily as he did the Co-operative Branch Managers Journal:
The rise in prices has been substantial and has been caused not by the housewife but by the spending spree inaugurated higher up the social scale by industrialists and financiers enjoying the fruits of Tory freedom from financial and other restraints.
That is a very partisan comment, but there it is. I am sure that the Chancellor will appreciate the voice of the Co-operative movement.
I should like to make several comments which will not be controversial. The first one is this. We must never become the victims of advertising. The last thing that a business man should do is to believe wholeheartedly in what he advertises. Certainly, in the by-election campaign which I fought in December, I found something which distressed me, not among my own supporters but among supporters of the other other side. I found that they believed wholeheartedly in everything that they had learned from the speeches of Ministers and others on their own side. It was the feeling that everything was fine. I submit that one of the dangerous things that we have experienced in the last few months has been the complacency which has overcome many workers and business men who support hon. Members opposite. This complacency is a bad thing. Coupled with cries of, "Free for all, do your best and carry on, fight for what you can," and all the rest of it, there is clearly not going to be a psychological atmosphere of restraint and caution.
The Government must, therefore, now go into reverse. They must stop all this talk about everything being fine. The Government must reverse their tactics—I am now giving advice in a purely non-controversial capacity—and say, "We are in a difficult spot; it is time for the nation to stand together. We will call on every section of the community to share in this great struggle to get the nation out of this situation." It seems to be a more advantageous way of solving the problems than by trying to pretend that all is well, when all is not well and the country knows it.
There is another point—I mention it non-controversially—which I should like


to make about the inequality of sacrifice which could arise in economic situations which call for a solution as rigorous as this. I wonder whether hon. Members opposite have faced up to the inequalities which may be asked of certain people. I heard the arguments on the question of cutting the subsidies. But before we reach the stage of cutting the subsidies, let us consider the incomes of people lower down the scale—not the Surtax payers. I know, as a general practitioner, visiting the homes of the people, that the older people, those living on pensions, have less to spend on food than any other section in the community. That is a simple economic fact. By cutting the subsidies we shall impose a greater burden upon them than upon any other section of the community.
Surely the Government can make an exception in this case. Will they come boldly forward and give a higher old-age pension to offset the tremendous demands which will be made upon these people? One only has to know these people intimately and to know their housekeeping records to recognise that even a few pennies make all the world of difference to the comfort of many of our old-age pensioners. I plead with the Government to realise that the inequality of sacrifice is something which will have to be avoided in order to achieve an economic solution in our time.
I will curtail my remarks because I realise that I have traded on the indulgence of the House for some time. My last point relates to unemployment. As a young man, I am delighted to hear the Chancellor say that there is no intention on the part of the Government to create unemployment. Hon. Members have said that we might get unemployment by default. I hope that that will not come about. Many things have been said about the younger generation. With every new generation people say, "The young people are not what they were in my day." Let me say this about the present younger generation. For fifteen years we have never known unemployment. We have heard about it and we realise that it caused a great deal of social misery. We realise that it sears a man's soul for years to come.
But we have never known unemployment. What will be our reaction to the party—whichever party it is—which suddenly, by default or deliberately,

brings back unemployment, in however small a quantity? Let me assure hon. Members that the young people as I know them will in their wrath reject the party which brings back unemployment of any size to this country. It will be death at the polls, I assure hon. Members, for the party which permits unemployment to emerge. The younger people will resent any such change as that.
We have more than a scintilla of doubt on the question of unemployment because we recognise three things. First, full employment is a great and fine principle, as enunciated in the House in "the right to a job," by Keir Hardie, the Member for the unemployed. Full employment is accepted. Secondly, we all hope for a favourable balance of trade in all the years that our country is a trading nation. Thirdly, we all hope for prosperity. Can these three things be balanced in the economy unless we are willing to manage the economy in some direct way? It seems to me that there is a reductance in the country to realise that we have to consider not only controls but a deliberate and conscious attempt by the nation to guide its economic destinies for the welfare of all the nation. To that end I hope that both parties will turn their minds.

7.51 p.m.

Sir Albert Braithwaite: I am sure that the whole House joins with me in offering our sincere congratulations to the hon. Member for Greenock (Dr. Mabon) on his maiden speech. He has shown himself a worthy successor to the late Member for Greenock, whose untimely death was regretted on both sides of the House. The great services which his predecessor rendered to the country and to the House will be remembered for a very long time. I assure the hon. Member that speeches such as that which he has delivered tonight, although I expect more controversial in tone, will be welcomed and relished by the whole House. We enjoy the cut and thrust of debate, and I am sure that the hon. Member will easily find a foremost place in that direction.
I want to address myself to the present economic situation. As most hon. Members know, I am an industrialist and a fairly large employer of labour—and, I hope, a reasonably good one. I am gravely alarmed at the constant crises


which have struck at the country ever since the war. No party seems yet to have found a stable solution. I am one of those who believe that this country cannot plan its economy in isolation because we are too dependent upon imports to this country, for which we have to pay out of the labour of our people. This island is very crowded, probably the most highly industrialised area of land in the world. We do not have the vast reserves of raw materials which many other countries enjoy.
The import figures for 1955 alarm me. Let us examine them for a moment. First, there is coal, upon which the whole of the fortunes of this country have been built. The whole of the economy of this island has been based on our being able to produce our own coal. Indeed, our coal exports always used to pay for all our imports from the Scandinavian countries and other European countries. In 1955, however, we spent £74 million, mostly in dollars and from the gold reserves, on bringing 12 million tons of coal into the country to help our economy. It is not only a question of spending this money. In addition, we are not set out to import coal; there is not a port in the whole country which can unload a coal ship properly. As a consequence, the coal had to be taken to Rotterdam, loaded into barges and brought back to this country at great expense.
To alleviate the situation we have bought petroleum products to the value of £336 million. That has not all been used by motor cars; much has been used in running industry which ought to be run on coal.
We have imported £55 million of animal feedingstuffs which ought to have been produced in the British Commonwealth. I say without any qualification that there are parts of the British Colonial Empire which could have produced the whole of that amount.

Sir Robert Boothby: And Scotland.

Sir A. Braithwaite: A little from Scotland.
The most amazing item in this record of imports is manufactured goods costing £894 million last year. When I see what we have imported I find some

amazing things—for instance, clothing, footwear, travel goods and handbags totalling £18 million. Is it not mad? Is it not crazy?

Mr. Arthur Lewis: How many old-age pensioners have bought them?

Sir A. Braithwaite: We could make every one of these things in this country. Other commodities imported include ferrous and non-ferrous base metals costing £231 million. I know that we have to have raw materials, but they are available in the British Colonial Empire and we could bring them here if only we set about it. It is absolute nonsense to import from all over the world indiscriminately and to destroy the whole of the sterling balances.
Another item which I want seriously to consider is that of woollen, worsted and woven fabric, cotton yarn and synthetic fibre yarn. The total bill is £63 million, yet I understand that there is still some unemployment in Lancashire. The ordinary business man may be stupid in some ways, but he does not do crazy things like that when he is short of money.

Mr. Douglas Jay: Does not the hon. Gentleman realise that this is Conservative freedom?

Sir A. Braithwaite: Certainly, but if it is Conservative freedom after a Socialist debacle Conservative freedom may be difficult to operate.
There is one other item to which I want to draw the attention of the House. Food and beverages were imported into this country last year totalling £1,252 million.

Mr. Shurmer: Champagne for the working man! I do not think so.

Sir A. Braithwaite: I do not know. The hon. Gentleman knows better than I.

Mr. Shurmer: Is it suggested that the working man drinks champagne at the great parties given in London every night?

Sir A. Braithwaite: rose—

Mr. Deputy-Speaker (Sir Rhys Hopkin Morris): There is too much interruption.

Sir A. Braithwaite: I am concerned with this import bill and with the fact that we are losing our gold and dollar reserves so quickly. It is the responsibility not only of the Government and the


Opposition but of every man, woman and child in the country to put it right now, We can only put it right by having more real savings in the country. We cannot go on spending everything we get, and still have something left with which to meet these difficulties when they occur.
I want to make a plea both to the Government and to the Opposition that both should pay a little more attention to those things of which we ourselves have direct control. We have nearly 100 million people in the British Colonial Empire who are in the sterling area and could help us, as many of them, in fact, are doing. Where we should be today without Malaya and that country's help in our economy, goodness knows. We cannot expect to hold these places unless we are prepared to envisage something more than the miserable £50 million a year that we are now investing in the Colonial Empire.
It will pay hands down, because every time we develop communications or provide electricity, water and irrigation, factories spring up, people obtain employment, the standard of life rises and exports and imports continually flow in and out. We cannot do this unless we tackle the job properly. I want to ask the Chancellor, if he has a Budget surplus this time—and I do not know whether he will have, after all these pessimistic rumours I have heard—if he will seriously consider reducing the standard rate of Income Tax, not in the form of giving back something to the taxpayer but in the form of a compulsory investment for everybody with an income of over £500 a year, of at least 6d. in the £. It would have to be done on a proper basis, and the money earmarked for colonial development in those parts of the Commonwealth which require further development.
If we did something of that sort, we could have something like £500 million to invest in railways, roads, harbours and the necessary ancillaries, to build up the ports. Almost everybody in this country would be concerned. If we organised it on the basis of a Government loan for twenty-five years, giving a reasonable rate of interest, those people who could not afford to hold the investment would be able to sell out on the market. I believe that, if we embarked on a proposition of this sort, the people would look upon it as an honour to take part and would ensure its success.
If this scheme was put forward in a substantial way, what could it achieve? First of all, my hon. Friend the Member for Ormskirk (Mr. Glover) has already mentioned the coal in Rhodesia. Rhodesia has one-fifth of the world's chrome, and without chrome new steel cannot be made. It has the largest coal reserves in the British Commonwealth outside India. The seams of coals are 30 feet thick, and there are thousands of millions of tons of it. Why cannot we use it? The reason is that at present we have no railways and no ports by means of which to transport the coal and ship it out of the country. They cannot even transport enough coal to keep the Copper Belt supplied, and when the Kariba Dam is built, coal miners, or the bulk of them, will be surplus.
Why cannot we harness those resources to our use? The people of this area are subjects of the Queen, and they are part of our inheritance. It will cost money to do this job, because it means building a railway across Africa. The railway would serve Bechuanaland, where all the coarse grains that we require could be produced, because there is plenty of water there; but that territory cannot produce these things now because, except a lot of rotten roads, there are no communications. We could bring that railway across Africa and establish a port on the Atlantic at Walvis Bay, or somewhere near there, which would mean that ships would be returning in a fortnight; whereas it would be impossible to bring it all the way there from the east coast of Africa, because it is too long a journey and the expenses would be too high.
Our defence programme, whether we like it or not, will run down, and our heavy industries will then be clamouring for orders. They will want orders for railway wagons, for rails, for conveyors and for loaders—just the very things that they would need if we got our people to work on this scheme. This is not an idle dream. I have seen the things that can be done there, and I have seen how they ought to be done, and I cannot for the life of me understand why we are so stupid in considering only investment in this country when we could build up our resources of raw materials beyond anything known in the whole world if we would only carry out this development.
The problem of development of our Colonial Empire is a responsibility which we cannot avoid, whichever party is in power. We are responsible for these people, for lifting their standard of life and giving them the amenities which they ought to have; but if we do not do this, then this generation, this Parliament and succeeding Parliaments—and even Parliaments that have gone before—will justly deserve it if these people eventually opt out of the Empire as soon as they obtain their freedom. If we have already established and built up all sorts of industries, we shall have a far better chance of retaining the friendship of these people and of building economic prosperity.
I do not fear any problem of unemployment. The whole world is on an inflationary basis, and not only this country. The demand for consumer goods is bound to rise, but we must be alert and produce the goods we want to produce at the right time. We have lost a lot of business by not being able to deliver at the right time goods we have contracted to supply, and there must be a really vigorous attack on the problem. The President of the Board of Trade can help a very great deal, and I hope he will, but I should like to see more competent and vigorous men in our consulates all over the world to help us with our trade. There are some good ones, but there is a lot of room in the Consular Service for people who can seize opportunities.
I want to say something about the Middle East. There is a booming situation there at present which we as a nation cannot afford to ignore. The vast oil revenues now going into the Middle East from all over the world will build up a purchasing power which I think can be a very useful factor in stabilising our economy. I hope that we shall attempt with all the vigour we can to improve our sales position in that area, in order to assure ourselves of the maximum of orders from that part of the world.
If we are to buy every year petroleum worth £300 million or £400 million, we want to exchange more than that value of goods, if it is possible, and I think that we should make a great effort to secure more and more of the expanding markets of the Middle East. I do not think there is any reason for anyone in this island to be

despondent. We have the best body of working people in the world—and I have seen work people in almost every country, including the United States. All our people want is good leadership and the opportunity to do their job properly.
I wish to say a word on one industry which I consider has a greater opportunity of playing a big part in restoring our balance than any other—the coal-mining industry. I have spent my life in it and have done a little towards producing coal in other countries since the war. The House will be glad to learn that we have at last got authority to dig more coal and, instead of the miserable 10 million tons we dug last year, we shall probably dig 13 million or 14 million tons, which will help towards producing the extra coal we require. That is something. I am sure that our own miners—without bringing in any Italians—could give us 10 per cent. more if they would. I do not like the Saturday working. It is a bad thing and always has been, but I think that a really concentrated effort by the miners of this country would give us 10 per cent. more coal. If we could get 30 million or 40 million more tons—

Mr. William Blyton: Can the hon. Member tell us on what basis we could get a 10 per cent. increase?

Sir A. Braithwaite: I can tell the House—on the basis of increased machinery and less absenteeism, which has been prevalent over the last two or three years, and which does not exist in any other industry.

Mr. Blyton: Will the hon. Member agree that extra machinery does not increase production, particularly in development work?

Sir A. Braithwaite: I am not talking about development work, but about existing mines. There are 80 mines which are declining and another 200 are improving all the time. There are many miners' representatives in this House. They can play a big part in this urgent problem of getting more coal from our own land. If we could only get that the balance of payments difficulty would disappear over-night. If we go on as we are doing now with a steadily declining production it will lead to disaster in the long run.
I know there are difficulties. I know that the average age of miners is now 42, and that includes young ones coming into the industry. It is not an easy task, but, on the other hand, there are now machines which enable men to do heavy work less laboriously than in former years. I make a plea to the miners, and I hope that miners' representatives will support it. They have a solution in their own hands if they will do a little more. Absenteeism is not fair to other people. I therefore hope that we shall be able to get more and more coal here in order to balance the situation.
I am afraid I have detained the House for longer than I ought to have done. To my right hon. Friend I say that industry understands the seriousness of the situation. Industry will do whatever it can to help. His greatest opportunity of improving the trade of the country is to get going with overseas trade and get going hard, as quickly as possible. We cannot stretch the economy at home very much more, but it can be made more elastic if we expand the range and harness 20 million more people in the British Commonwealth to the sterling stability. Then my right hon. Friend will have done a great work in maintaining our economic position here in this island.
People are getting just a little tired of continuing crises. They are not going to take all kinds of excuses very much longer. They want some determination. I believe they will back firmness. I believe they will agree to distasteful measures if they can see the possibility of putting things right. Do not let us play with the job; let us get down to it, and work with a good heart.

8.15 p.m.

Mr. George Darling: This afternoon we have heard one or two remarks about restrictive practices, particularly on the part of trade unions. Although when I came into the House I had not intended to say anything about it, I think we ought to clear up this situation.
If there are restrictive practices on the part of workmen in industry, we have to decide whether those practices are put into operation by the workmen—usually as a result of long established customs and traditions as among craftsmen in many craft industries, without trade union

sanction or backing—or are brought into operation by trade union rules. If hon. Members go into the question, I think they will find that if there are restrictive practices in operation they are usually operated not with trade union rules but as customs which have grown up, and that no trade union rules backing those customs can be found.
Where such practices exist generally the assumption is that the unions ought to drop those practices, as if the unions were in control of industry. Obviously, those practices grew up because there was a need for them. The unions had to defend themselves against employers somehow or other for some reason or other. They had to defend their craft basis, they had to defend the jobs they were carving out for themselves and, over the years, they became accepted as craft jobs. Usually, the practices arose from that situation. The reasons for restrictive practices in that respect are largely historical. To get rid of them is surely a matter for management in discussion with the unions.
I am keen to raise this matter because, taking the engineering and shipbuilding industries as a prime example of where craft divisions and craft practices exist, I should tell the House that in 1945 I had a long private discussion with the late Sir Alexander Ramsay, then the president of the Engineering and Allied Employers' Federation, and the late Mr. Alec Low, who was then secretary. I discussed with them the situation which would arise after the war when new machine processes would be brought into operation in the engineering industry which would make many of these craft divisions futile and unnecessary in the new situation. I asked those two eminent gentlemen what the engineering employers were going to do to prepare for that situation.
The reason I was talking to them was that I had a pet scheme to which I wanted to give publicity, that from the ending of the war onwards youngsters going into the engineering industry should be apprenticed to the industry and not to a craft. I shall not go into details, as there is not much time to do so now, but there is a solution to the problem there. The employers, however, were not prepared to offer any proposals for getting rid of the craft divisions of industry.
We need a new wage basis in the engineering industry. At the moment, there are about 76 different wage rates for various classes of work in the engineering industry. To get anything like order into that industry we need to break down that terribly old-fashioned wage structure. In 1946, the unions put forward a proposal to do that. Who turned it down? The employers; they would not even consider it. The unions took their wage claim further, and it went to a court of inquiry set up by the Minister of Labour. The court of inquiry made a very strong recommendation that the engineering employers should consider a new wage structure for the industry. We cannot get rid of these practices until the industry has a new wage structure. I will give some reasons.
Take the case, which is receiving publicity in the newspapers, of Cammell Laird's and the question of who drills the holes when what they are being drilled through is composed of both metal and wood. If anyone takes that isolated case by itself, and tries to solve it, what will happen will be that the winning group of craftsmen will maintain their craft basis and the other group will be demoted; they will lose their craft and have wage reductions. Obviously, the workers will not accept that. That is not the solution to the problem. The solution is to introduce a new wages system into the engineering industry and to get rid, if it is necessary to do so, of these craft divisions by agreement with the unions, by apprenticing youngsters to the industry and not to a narrow craft division of the industry, and generally to prepare for a completely new deal in the engineering and shipbuilding industries.
But who opposes all that? It is not the unions, for they have been pressing for a new wages system, which must come first. It is the employers who are opposing it. I therefore suggest to hon. Members that when they talk about the restrictive practices that go on on the workers' side of industry, they should bear in mind that the people who are responsible for running private industry are not the trade unions. The private owners and managers of industry are responsible, and unless they can take a lead in making offers, suggestions or proposals to the trade unions, nothing will be done. But the initiative must come from them

and there is no initiative coming from the employers in the engineering industry on this or on any other constructive matter at the present time.

Sir Peter Roberts: The hon. Member has made a very sweeping statement which I am certain is not correct. He is trying to ride his pet hobby-horse by saying that the employers are responsible for trade union practices of restriction, which is quite unrealistic and should not go unchallenged in this House.

Mr. Darling: I should be glad if the hon. Member would challenge me on it by saying just what the employers have done to alter the situation. I will sit down while he tells me.

Mr. Deputy-Speaker: The hon. Member must await his opportunity to make his speech.

Sir P. Roberts: I am much obliged, Mr. Deputy-Speaker.

Mr. Darling: I assure the House that there will be no evidence in the hon. Member's speech of employer forth comingness from the Federation. He knows very well that the employers have made no offers of any kind to the unions to get rid of these practices on the part of the workers.

Sir P. Roberts: Wait.

Mr. Darling: Very well, I will wait for it.
The Chancellor said today, that he hoped the unions would not create difficulties over the measures that have to be taken to deal with the country's difficult situation. He was rather hesitant in making any claim for equality of sacrifice. I am not sorry that he did not mention those hackneyed words. One of the points that was conspicuous by its absence from the Chancellor's speech was any reference to the financial interests, which have been doing fairly well over the last four or five years.
I remember that when some of the steel firms which had been taken into nationalisation were being sold back—firms like Colvilles—the shares that were offered were always oversubscribed many times over. In fact, the applications for shares in the case of Colvilles were tremendous and the shares available had to be rationed. I am convinced that a large


proportion of those applicatons for shares were quite fictitious; that stockbrokers were making applications in the names of their grandmothers, aunts, uncles, sisters, typists, chauffeurs and everybody else, because there is not that number of people with their own financial means to make applications for shares unless the applications had been swollen in that way.

Colonel O. E. Crosthwaite-Eyre: This is a serious statement that a stockbroker would make bogus applications. I hope that if the hon. Member has any evidence he will give it to the House, or else slightly modify his language.

Mr. Darling: Of course I do not have any evidence. I was going to suggest that it would be a good idea if applications for shares of that kind, on any issue that is oversubscribed in that tremendous way, were examined to find out—

Colonel Crosthwaite-Eyre: The hon. Member must know that all applications for shares are examined. If he has any information that they are not examined, will he, again, give it to the House or else withdraw?

Mr. Darling: May I explain what I am trying to say? I am convinced—there is no evidence one way or the other, so I will stick to my opinion—

Colonel Crosthwaite-Eyre: Of course there is evidence.

Mr. Darling: —that stockbrokers—they probably do it regularly as far as I know—when they know that an issue of shares will be rationed, make applications in the names of their staff, and so on, so that they can get as many rationed applications as they can.

Colonel Crosthwaite-Eyre: The hon. Member makes a statement like that without any proof whatever.

Mr. Darling: I am convinced that the number of applications made greatly exceeds the number of people who would be making application if there was not that duplication.

Mr. David Price: Does the hon. Member realise that the number of applications is calculated according to the number of offers, most of which come from the insurance companies and not

necessarily from individuals? If there is an application for 10,000 shares, it is taken as 10,000 applications and not as one application.

Mr. Darling: I was talking about the application for these steel company shares; and, as the hon. Member knows, the large applications were excluded. The smaller applications were definitely encouraged, and it was the size of the number of small applications that made me take my point of view. I will withdraw it if it is not correct.

Colonel Crosthwaite-Eyre: I thank the hon. Member.

Mr. Darling: I said "if it is not correct." I am not sure whether it is correct or not.
The point I want to make is that some of those who were successful in their applications—I still think that some of the applications were duplicated in the way I have suggested—a day or two later sold their shares at a profit. Of course, in buying them they were not interested in the steel industry; they were interested only in making a profit out of the deal. They made a substantial profit in the sale of steel company shares at that time.
The workers in the steel industry know this. They know that people who have never done a day's work in a steel works are piling up money in this way. As long as that kind of thing exists, it will be very difficult to tell the trade unionists that they must make sacrifices. I want to know whether there is any means of getting equality of sacrifice in this community when there are lots of people operating on the Stock Exchange who get easy livings and easy pickings, as they did in that fashion over the steel shares, which infuriates the ordinary worker in the workshop, who wonders why he cannot get that sort of easy living.

The Financial Secretary to the Treasury (Mr. Henry Brooke): Would the hon. Member also give to the House particulars of the recent South Durham issue? The South Durham shares now stand at a substantial discount, so there is not any easy money there.

Mr. Darling: That is the result of Government policy. As the right hon. Gentleman knows quite well, it is the consequence of the restrictive atmosphere which has been developed.
The Chancellor, on Friday, tried to draw an analogy between our present unfortunate situation and a house where the electricity supply is overloaded. It is a misleading analogy, because the assumption is that we are all in one house, that all our living conditions are similar. In fact, we are living in many different houses. Some people are well off, some people are not so well off, and there are old-age pensioners, and so on. If the right hon. Gentleman wanted to be completely fair in drawing the analogy, he should have said that the electricity supply to a row of houses is overloaded.
In those circumstances, what we ought to do is ration the supply of electricity so that what electricity can be supplied is rationed fairly according to need and not according to purse. But the right hon. Gentleman has discarded the rationing idea. He does not want any controls. Instead of having a rationing scheme he is going to make everything so dear by the increase of the Bank Rate, by Purchase Tax, by taking off the subsidies, and so on, that people living in the poorer houses will not be able to afford as much electricity as they bought before. We say that there ought to be controls; and, if we are short of electricity, we need more power stations to generate more electricity.
That he has discarded controls as unfair is silly, because in the last few months we have been passing legislation putting controls on people. There is the Road Traffic Bill, there are the new Food and Drugs Regulations. We are putting controls on people all the time. If the Government want to get rid of controls, they should get rid of things like the Milk Marketing Board—not that I am advocating that they should, for I am all in favour of it; but if they want to get rid of controls, they could get rid of control schemes of that kind. The truth is that there are only certain kinds of control schemes the Government want to get rid of or do not want to bring into operation.
If we are to tackle this problem of inflation and get our economy into balance again, we need not only controls but a great deal of Government intervention in industry. I do not want to take up time by mentioning many examples, but I would mention one or two to illustrate what I mean. To bring down the cost of living, or to obtain stability in retail

prices, we have to think not only of the basic financial problems involved, but we have, if we can, to make the operation of sending the goods into the shops cheaper. We have to bring down costs. How foolish, then, are some of the things the Government have allowed to go on.
I take the case of bacon. I think that the hon. Member for Louth (Mr. Osborne) will agree that one way to bring down the costs of distribution is greater efficiency in retailing. Far too many people are employed there, and one method of reducing costs is that of the self-service stores. I am glad to see the hon. Gentleman agrees with me. In some self-service stores bacon is displayed wrapped, each package bearing on the wrapper a notice of the weight and price of the contents. The customer can then take what she wants. In the case of bacon—there have been prosecutions in Essex in the last two or three weeks—this is illegal unless the weight of the rashers in a package works out in multiples of 2 oz. It is stupid. Firms which have gone into the self-service business have been prosecuted because they put rashers of bacon into packages the weight of which did not work out in multiples of 2 oz.
Why has this situation arisen? The old Ministry of Food allowed retailers to do a proper job until this Government got rid of the controls. We are back now to the Sale of Food (Weights and Measures) Act, 1926, which is completely out of date and makes these things illegal. I am sure that hon. Members would agree that control should have been retained in this case to make efficient distribution possible.

Mr. H. A. Price: Will the hon. Member apply the same argument to the position in Smithfield, where people who buy meat want to help themselves and not bother about bummarees?

Mr. Darling: We ought to look at the whole situation in Smithfield. There are far too many wholesale firms operating there.

Mr. Price: How many?

Mr. Darling: I do not know. I would operate the whole of the London meat trade in an entirely different way. It should be operated as it was to a very


large extent during the war, but then these people drew a great deal of income, a kind of pension, for doing precisely nothing.
The final example of Government intervention concerns the way in which the Government can help to promote efficiency in industry. In those industries which are engaged in export trades I suggest that it might be possible to say that when public contracts are handed out in response to tenders, preference will be given to those firms which have taken the trouble to get into the export market and are willing to spend in the export trade, part of the profits from public contracts.
This brings me to the Sheffield cutlery industry, which I have been attacking in the Press recently for its lackadaisical way of doing things, for the complete inefficiency of some of the smaller firms, and for their refusal to take any interest at all in the possibilities of developing exports. There are several good firms in the Sheffield cutlery industry which ought to be encouraged. If the Government intervened by declaring that preference in public contracts would be given to firms which have entered the export trade, it would probably put the rest of the firms on their toes.
I hope that proposals of this kind can be considered. I hope that we will not run these things in any doctrinaire fashion and say that all controls are wrong, that all Government intervention is wrong and that the way out of difficulty is to let private enterprise go ahead. Some controls are necessary, even from the point of view of hon. Members opposite. Some Government intervention is necessary. We on this side of the House would go further than would hon. Members opposite, but I hope that the Chancellor and those working with him will get rid of their doctrinaire views and consider seriously proposals for Government control and intervention.

8.39 p.m.

Sir Peter Roberts: I am in a little difficulty in that I have a speech to make on the economic situation but I have also had a challenge from the hon. Member for Hillsborough (Mr. G. Darling). If I may be forgiven for being diverted from my main theme, I should like to tell the hon. Member that I can take him with me tomorrow, if we can

make the journey, and show him apprentices who are not allowed to do as much work as they could do because of trade union rules. I can show him machines idle because of disputes between one union and another, and I can take him to a coal mine where a stint could be increased were it not for the fact that trade union rules will not allow it. The statements which the hon. Member made were far too wide and quite irresponsible.

Mr. G. Darling: I am sure that the hon. Member does not want to misrepresent me—

Sir P. Roberts: The hon. Member was trying to put a great deal of responsibility for these practices upon the employers. The responsibility must be on the trade unions. I am certain that the trade unions are working to get rid of them and do not want to see them increased.
To return to the main theme of the debate, I was pleased to hear the approach made by the Chancellor of the Exchequer when he said that this problem must be faced by all sections of the community. I was equally pleased that the right hon. Member for Huyton (Mr. H. Wilson), after an amusing, knockabout speech, finished with a peroration with which I entirely agreed. We must be thankful on this side of the House that the right hon. Gentleman advocated that both parties should do the best they could for the country.
I am glad to support my right hon. Friend with regard to the credit squeeze. I know that it is unpopular and that it has many disadvantages but, on the whole, I believe that it is the correct policy to adopt at this time. I also support the action about the Bank Rate. I advocated that there should be a higher increase almost a year ago and so, in some ways, this is a little belated. Nevertheless it is the right policy, and although the right hon. Member for Huyton pointed out the dangers inherent in the extra bill which we shall have to meet abroad, on the whole this rise is disinflationary in its effect and is satisfactory at the moment.
The most vexed question raised in the debate this afternoon has been the curtailment of investment. Like others of my hon. Friends, I am not satisfied that the Government are going far enough, in this respect. We were given a somewhat indefinite figure of curtailment


for local authority and other investment. It would be helpful if we could be told a more definite figure which the Chancellor expects to get. However, since we are to increase our commitments by about £117 million of Government expenditure I feel that the curtailment has not gone far enough. Many times the classic theory has been advanced that the Government, in times of depression, should inject orders into industry but that in times of prosperity the Government should withdraw orders. I believe that more could be done along those lines.
I agree with the argument advanced by right hon. and hon. Gentlemen opposite to the extent that I would be prepared to accept some form of building restriction. That is not against Conservative policy, although a number of hon. Gentlemen opposite have been trying to suggest that we believe in a free-for-all and that we do not believe in controls. The fact is that for a number of years we have exercised many controls. So I do not think that we should be departing from Conservative policy if we were to adopt some of the suggestions made by the right hon. Member for Huyton.
In fact, I believe it might be a good thing, because we might then get some good will and help from responsible hon. Members opposite and from the trade union side of industry. Therefore, it would do no harm if my right hon. Friend said tomorrow that he would consider the proposals put forward, some of which have been helpful. It could do no harm if we cut down some unnecessary building by restriction. After all, we control investment through the Capital Issues Committee, so why not use equivalent machinery to control physical investment in bricks and mortar? I am not frightened of that.
Now I come to the importation of luxury goods, which have come into the country on a large scale over the last year. Many of us on both sides of the House are worried about this matter. Is it really against Conservative policy to have restriction of imports? Long ago the Conservative Party believed in Protection and the banning of certain imports. It was hon. Gentleman opposite in those days who were on the side of the "Wee Frees."
I am not frightened, as a Conservative, of some forms of restriction on imports if, as was suggested by one hon. Member opposite, the trades themselves are not prepared, after a certain amount of warning and instruction, to take the advice of the Government. I am satisfied, in view of some of the statements made, that the Government could consider some restriction of imports of feedingstuffs and of a certain amount of luxury foods and wines without any detriment to Tory policy or Tory principles. I believe that if we were to do that today or tomorrow it would help a great deal in trying to bridge the gap between both sides of the House at the present time.
I have been fairly complimentary to the right hon. Gentleman the Member for Huyton, but I am afraid that I must cease to be so now. He seemed to make out, so far as I could follow his speech, that control of building licences and control of imports were in themselves a sufficient policy set against the policy of Her Majesty's Government.

Mr. H. Wilson: No.

Sir P. Roberts: That is what it seemed like to me. I am glad to hear that I am wrong. It seemed to me that the right hon. Gentleman was putting up some alternative to what was being suggested from this side of the House.
I was impressed by the argument of the right hon. and learned Member for Montgomery (Mr. C. Davies) when he pointed out that under Socialism, and with control and restrictions, we still had recurring crises of one kind or another. I think that whoever is to reply to the debate for the Opposition must answer this problem put to them from both sides of the House—how they face up to the fact that although we had building licence control and import restriction controls, nevertheless we had one crisis after another, particularly in 1949 and 1951.
There were two policies which the Labour Government put over at that time. We have not heard mention of them today. No mention has been made of the two main weapons used by the Labour Government when they were in power. The first was the receipt of the dollar loan from America. I was one of those who supported it at the time. Had I known what was to happen to it afterwards, I doubt whether I should


have done so. I think that much of it was given away unnecessarily and not put into investment as it should have been. At any rate, that was one method.
Is anyone on the other side of the House going to say, "Let us have another dollar loan?"

Mr. Wilson: indicated dissent.

Sir P. Roberts: The right hon. Gentleman is shaking his head. I am glad that he is.
How nice for the Government if, for a few years, we could have an injection of dollars. But we should have to pay for it in the end. We are now having to pay back some of the money which was borrowed by the right hon. Gentleman's Government, with the support of hon. Members opposite. They must remember that one of the difficulties with which we are faced now is that we have to pay it back out of our gold and dollar reserves at the end of each year. It is a heavy drain on our reserves. It is part and parcel of an acceptance of the American loan.

Mr. Wilson: That loan was accepted one year after the end of a great and devastating war and it was necessary because the American Government had cancelled Lend-Lease, which they later said was a great mistake. It was needed during the period when we had to build up our export trade. We have now had ten or eleven years in which to build up our export trade.

Sir P. Roberts: We know that it was one method of dealing with this problem. We are not suggesting that America should do it again. In the days of the Labour Government that money was coming in; now it is going out.
The other classical method of hon. Members opposite was devaluation. We have heard nothing today about the Socialist method of dealing with these problems by devaluation. It would get my right hon. Friend out of a temporary difficulty if he were to devalue the £ now, but God forbid that he should do so. The consequences, in two or three years' time, would be devastating. I believe it was when the right hon. Gentleman was at the Board of Trade that we devalued the £. We obtained a temporary benefit and then, as soon as trouble came along. hon. Members opposite said, "What shall

we do? Let us get out from under," and they did. [HON. MEMBERS: "Nonsense."] Now, when we are faced with difficulties directly arising from that situation, some hon. Members shout "Nonsense."

Mr. Frederick Mulley: Since I have the honour of representing a constituency adjoining that of the hon. Member, I would remind him that the Conservatives have been in office since 1951, and he should recognise that they must be responsible for the present situation.

Sir P. Roberts: I do not want in any way to ignore our present responsibilities. I was merely pointing out some of the alternative remedies which hon. Members opposite applied to these problems in earlier days. They are not suggesting those remedies now; as I see it, they are merely suggesting one or two extra controls. I think that we should accept those controls. I hope there is not very much difference between us in that respect.
There is one factor which is highly inflationary and which must never be forgotten, namely, the high rate of direct taxation. I am quite certain that it is responsible for a good deal of the increase in prices. As taxation goes up, producers tend to put up the prices of their products, because they must have a fairly constant net figure at the bottom of their accounts.

Mr. Chapman: Direct taxes have been coming down, but the prices have been going up.

Sir P. Roberts: I am merely saying that taxation represents some part of the price of goods in the shops. If we could reduce taxation in the proper way I believe that it would help to reduce the prices of goods in the shops, which is what we are trying to do.
If we remove taxes from the individual we must also encourage savings. In order to help individuals to save I should give new benefits to those who are prepared to do so. On the other hand, we can also give a great deal of benefit to our public companies. We should make sure, however, that the extra money they receive is used not in increasing dividends or in payment for any extra commitments, but in a reduction of prices. If that were done I believe there would be a large measure of price reduction all round.


That would provide a basis upon which the Government could call for some kind of stabilisation of wages and profits.

Mr. Lewis: That was tried in the April Budget. Tax reductions for the rich brought further increases in prices.

Sir P. Roberts: The hon. Member is wrong. He has not appreciated what I am trying to say.
If the Government reduce company taxation they should, at the same time, say, "The benefit you receive must be used in the reduction of your prices." That is my point. The reduction in taxation should be equalled by the reduction in prices.

Mr. John Rankin: One other control.

Sir P. Roberts: It is difficult to cease making a speech when hon. Members interrupt.
I believe I speak for most of the Conservative Party when I say that we are not against controls as such. [HON. MEMBERS: "Oh."] I know that the Daily Express and some hon. Members opposite try to make out that we believe in a free-for-all.

Mr. Lewis: Does not the hon. Gentleman remember those big posters?

Sir P. Roberts: I find it a little difficult to put over this argument in view of the very unseemly and irresponsible interruptions.
I do not believe that we are upon the brink of financial ruin, as was suggested by one right hon. Gentleman this afternoon. We have to go a little more slowly along the road to prosperity; that is all. We must not lose confidence in the future and must avoid these recurring crises. If proper steps are taken now, I believe that that will be done.

8.55 p.m.

Mr. Frederick Lee: We have heard three maiden speeches today, two by hon. Members on the Government back benches and one by my hon. Friend the Member for Greenock (Dr. Mabon). I had the good fortune to hear two of them and I thought the level was very high. Listening to the hon. Member for Carlisle (Dr. D. Johnson) philosophising on various issues, I could shut my eyes

and almost imagine that Dr. Johnson was back with us again.
The speech of my hon. Friend the Member for Greenock was a very fine effort for a maiden speech. I tried to think back over the ten and a half years since I made my own maiden speech. I am certain that I never sounded anything like my hon. Friend. His speech was sound and confident and I am sure the whole House enjoyed it. I know I speak for every hon. Member when I congratulate all three speakers. I trust that we shall hear them on many occasions in the future, when they can be a little more free and contentious in their remarks.
The hon. Member for Heeley (Sir P. Roberts) appeared to accept more and more controls every moment of his speech. They were far in advance of anything we were prepared to ask for, and I was hoping that we were not going to see another split in the Tory Party. If my hon. Friends had allowed him to develop his line of argument I am sure he would have had to go into our Lobby tomorrow night. The hon. Gentleman informed us that Tory policy was not of necessity opposed to controls. I wish somebody had told that to the previous Chancellor of the Exchequer a few years ago. Hardly anything is left of the economic planning which existed when the right hon. Gentleman took over at the Treasury.
The hon. Member for Heeley referred to what he believed was the failure of the controls which the Labour Government administered during their period of office, but I contest the idea that our controls were a failure. Let me recall that the right hon. Member for Woodford (Sir W. Churchill) told us that we inherited a bankrupt State in 1945. Had it not been for the consistency with which we refused to accept the ideas of the Conservative Party to allow a free-for-all, we could never have channelled our production into the right priorities and could never have laid the basis upon which we converted the bankrupt State of 1945 into the Welfare State of 1951. That was done largely because of the manner in which the Labour Government controlled the economy of the country.
In opening the debate, the Chancellor of the Exchequer told us that the situation was serious and might become


dangerous. I think I have his words right. That was a great advance on the sunshine stories to which we have been listening from the Government benches for so long. When did the Government realise that the situation is serious and might become dangerous? Can someone put a time limit on it? I go a bit further and ask whether anybody has ever told that to the Prime Minister.
The House may recall that as recently as the by-election at Taunton the message which the Prime Minister sent to the Tory candidate was in these terms:
Under Conservative policies the nation has thrived and come to a state of prosperity greater and more widespread than ever before in our history"—

Hon. Members: Hear, hear.

Mr. Lee: I wish that hon. Members opposite would make up their minds about this. Are they now throwing overboard their Chancellor of the Exchequer the very day he makes his case? The Prime Minister's message goes on:
It is the pace of this prosperity which has contributed to the problems of the balance of payments abroad and of rising prices at home. We have been buying too much at home and not sending enough abroad to pay for our imports and build up our reserves. If we had allowed this to go on, we should have landed before long in one of those financial crises which were such a regular feature of life under the Socialists.
When the Prime Minister can tell the electors of Taunton, only a few days after the January figures showed an import-export gap of £70 odd million, and when he knows that a quarter of our gold and dollar reserves slipped away last year, the statement that we have not quite managed to build up our gold and dollar reserves is, perhaps, the opposite of exaggeration—a British under-statement. I have not yet been sufficiently fortunate to have a copy of his message to the electors of West Walthamstow, and I do not know whether there are to be any slight amendments before it goes round to the Tory candidate there, but I should hate to be the Tory candidate at West Walthamstow reading that sort of message from the Prime Minister, following this debate.
To speak on a more serious note, is it really to be wondered at, with messages of that type coming from the Leader of a Government who knows perfectly well the background of the statistics for January and the state of our reserves for the year,

that workers feel that there is no spur of urgency about the present economic position? Would it not be truer to say that the right hon. Gentleman was far more concerned to spur them into voting Tory than into rescuing the country? When the nation is up against great difficulties we are entitled to expect something better than that from the Prime Minister.
We have suffered from this inconsistency of Ministerial statements for so long. I should have thought that the only constituency shown in the Government's policy has been in the stream of contradictions which passes for policy. The Government ask for more production and refuse credit facilities to improve and modernise industry. They profess to be worried about imports being too high, but boast of their performance in dismantling the system which controlled imports. They complain about exports being too low and unleash a dividends spree which causes living costs to rocket, and leads to further wage demands and drags more goods into the home market. Now that their supporters have enjoyed their dividend spree and received their rewards for past performances we are regaled with the spectacle of the same section of the community demanding haloes for themselves for threatening to stabilise prices at the highest point they have yet managed to extort from the consumer.
The truth is that, having by their own greed and avarice brought their own Government to the verge of disaster, they are afraid that they will lose them, and are therefore suggesting, somewhat coyly, that their own sacrifices—if that is the right word—give them the right to ask for wage restraint on the part of those whom they had been exploiting. If it is possible to stabilise prices now, it has been equally possible at any time during the last three years. Indeed, I have not heard any word from the opposite side of the House to explain what are the economic, as distinct from the political, changes which make stabilisation possible now. I have certainly heard nothing from the Chancellor in explanation.
During the last week-end the British Employers' Confederation made a somewhat remarkable statement. It concerned the nationalised industries. Indeed, the B.E.C., not content with its demand of a few weeks ago for 750,000 unemployed, has now begun to bully and brow-beat


the nationalised industries for conceding wage advances to their employees. The B.E.C. refers to Mr. Randall, who has resigned from the chairmanship of the London Electricity Board, and goes on to state that the Transport Commission and the National Coal Board have been giving wage advances.
I believe that this is a very serious step to have taken. In the first place, I should not have thought that advances, especially by the Transport Commission, could possibly have been conceded without discussion with the Government. If the Minister of Transport tells me that that is not true, I will withdraw it. But we are, in any event, coming to the point where one section of employers believe that they are entitled to interfere in the negotiations between employers and employees completely outside their own industries.
I recall that two years ago we had an industrial debate in this House when I made one or two suggestions. I was referring to what I considered to be a paradox. I said:
We have had in the last two years the most complete paradox that Britain has ever known. We have had a Tory Government in political power and the trade unions in industrial power. It is anybody's guess how long this could go on.
Having argued that matter and said that the employers were getting near to the point where they would try to resolve this paradox, I then said:
This is the position as some of the big employers' federations see it: Here we are in the third year of Tory power. The trade unions can still demand wage advances. Something has gone wrong in the state of Toryism.' They believe that while there is yet a Tory Government in power they had better initiate a show-down in order to get the trade unions into their pre-war position.
In this atmosphere the only thing which has postponed…that battle taking place has been the fact that there were three nationalised industries, each of whom has conceded a wage advance. In other words, they have said We believe that there is justice in your case,' and they have proceeded to give wage advances which, I submit, completely knocked the feet from under the engineering employers in their attempt to get a show-down with the unions."—[OFFICIAL REPORT, 3rd March, 1954; Vol. 524, c. 1274–5.]
It looks as though I was not far from the mark. Here we have reached a position where the same people can openly interfere and demand that no nationalised

industry should be free to negotiate wage advances with its own people.

Colonel Crosthwaite-Eyre: rose—

Mr. Lee: Perhaps the hon. and gallant Gentleman will wait a minute until I have finished this point.
I wonder what would be the position if large confederations of trade unions in some industries decided to insist on unions in quite different industries demanding wage advances as a lever to justify demands for themselves? That is the precise opposite of what the B.E.C. is doing. I submit that there can be no question of free and open negotiations between unions and employers whilst bullying and brow-beating of that type goes on from people completely outside the industry.

Colonel Crosthwaite-Eyre: The hon. Gentleman is making a most important point. Could he quote any words used by the B.E.C. to justify the description "brow-beating" which he has used?

Mr. Lee: The whole question of putting out statements—

Colonel Crosthwaite-Eyre: Quote the words.

Mr. Lee: If the hon. and gallant Gentleman reads The Times and the Manchester Guardian of this morning he will find it all. If the hon. and gallant Member believes that for the B.E.C. to put out statements, saying that the nationalised industries can give wage advances because they can pass them on to the public, is not brow-beating, I do not understand what he means by browbeating.

Colonel Crosthwaite-Eyre: There is nothing about brow-beating.

Mr. Lee: I was putting it to the Government that it might be as well at this early stage if they caused the B.E.C. to be informed that it would be much better if it minded its own business and kept out of negotiations between the nationalised industries and the trade unions.
The vital difference between this crisis and other crises since the war is that neither the Government nor the Opposition can claim or do claim that it arises from external causes. Our Amendment makes clear that it is not only the fact that there is a crisis which prompts us to


condemn the Government. Rather it is that we condemn them for pursuing policies which, despite the favourable movement of world prices and other factors, such as an increased volume of world trade have landed the nation in its most serious economic position for a quarter of a century.

Colonel Crosthwaite-Eyre: Oh!

Mr. Lee: If the hon. and gallant Gentleman will not take that argument perhaps he can be convinced in another way. The Stock Exchange Gazette, which is hardly a Labour journal—perhaps the hon. and gallant Gentleman will agree with that, at any rate—made this comment on 6th January, 1956:
In retrospect the last 12 months can hardly be described as a period of outstandingly good and strong Government. The achievement of this country in raising the cost of living by 6 per cent. at a time when import prices were almost stable, and when there was no great inflationary demand coming from overseas, is one of which nobody can be very pleased or proud.
We claim that the object of the Government's policies has been the re-creation of the pattern of wealth distribution of prewar days. We further claim that as the system of economic control and planning, with its fair shares of food and housing subsidies, was completely unsuitable to their objectives, they pulled it down and substituted the use of their famous finance mechanism.
By any test which can be applied, that method has proved to be utterly and completely disastrous. The measures recently announced by the Chancellor, harsh and filled with class bias as they are, constitute a further turn of the screw in pursuance of the policies which have already failed. Indeed, it seems that we have almost reached the point where the proof of the failure of a given policy appears to be an essential prerequisite to even greater dependence upon it.
One basic argument used by the Tories, at the 1951 Election especially, in order to achieve power was with respect to the cost of living. In case any hon. Members opposite have forgotten what they said I will quote from their Election manifesto:
A Government will be judged according to the effects of its programme upon rising costs and prices.
Any comment? On that alone none of them can deny that within the planned

economy which we had, and which they destroyed, retail prices were rising far less than import prices. Since 1951, as my right hon. Friend the Member for Huyton (Mr. H. Wilson) said in his remarkable opening speech today, with import prices far more favourable to us, the cost of living has risen by 23·6 per cent.
If they are honourable men, in the sense that they wish to honour their 1951 pledge, why not return to the system which proved its superiority over that which they have been using? I will tell the Chancellor of the Exchequer and his colleagues the reason: because the Chancellor and the rest of his Government are more concerned to save their faces over their utterances about physical controls than they are about the country's welfare.
We all remember that during the last Election campaign, the present Minister of Supply—I think he is—made a remarkable and outstanding discovery. In fact, he almost became the Christopher Columbus of modern Toryism. He said that controls meant personal rationing, and there followed a despicable campaign, including the flashing about of dummy ration books. During the Budget debate on 21st April, 1955, he argued that controls over food imports would inevitably involve rationing Shortly afterwards, the Tory Party Central Office issued a further statement by the right hon. Gentleman, and if anybody wants the reference they will find it in The Times for 16th May. Then, the right hon. Gentleman was arguing that controls over either imported food or raw materials would involve either unofficial or official rationing, and he went on to say:
Of course, there is one way out. That is to put up the prices deliberately, and so prevent customers buying as much as they want to.
That, in one sentence, describes the policy which his Government have followed.
The same fear of loss of face is causing the very gravest damage to our industries. Capital investment of all kinds has been retarded by the credit squeeze, and now it is to be even more seriously enforced. One might imagine that we had done very well as far as new capital formation is concerned. I asked a Question on this the other day, and, apparently, the truth of the investment issue can be summed


up in this way. Fixed capital formation in manufacturing industry in 1954 was running at 3·7 per cent. of the gross national product, as against 4·2 per cent. in 1950—and this after a series of incentive Budgets.
It is not possible for British industry to be able to compete with the huge modernisation programmes of our competitors with that sort of investment programme going on, but even that is now considered to be too high. I know that following 1954 there has been an increase, but in the main they have been in matters other than the actual production and installation of plant. They have been in buildings, I agree some of it industrial building, but most of it in the wrong places, and our Development Areas will suffer before very long in consequence. The hon. and gallant Member for Heeley said he was prepared to deal with the issue of building licences, and so on. Why do not the Government deal with it? I suppose we have to come back to the same answer: because they will not face the ridicule which would be theirs, having said what they have said on the subject of controls.
There is need for facilities for the correct type of capital investment on a greater scale now than ever before. The word automation is coming into the language. Automation is going rapidly ahead, both in the United States and in the Soviet Union, and at this very critical phase—a phase in which there should be a great increase in capital investment of this sort—we are to enforce more tightly a credit squeeze which has already failed dismally in its objective.
Again, in July of last year, we were told that our adverse trade position was caused by the dock and railway strikes. There were statements from the Board of Trade and the Treasury on this matter, and we were assured that once the effect of these strikes had worked themselves out, all would be well. I do not know whether the President of the Board of Trade can tell us why they did not work out quite like that. Apparently, now, the effect of having worked themselves out is that our balance of trade position is far worse than it has been for a long time, so that the Government must find another excuse for it, and the new excuse,

apparently, is that the workers will keep on demanding wages and salary increases.
It is not for those who, by lowering the Profits Tax and the Income Tax, and getting rid of the Excess Profits Levy without putting anything in its place, have deliberately increased dividends, to blame the workers for causing an inflationary spiral and preach the virtues of moderation to those whose living standards are already moderate.
No matter how careful the Chancellor of the Exchequer thought he was being in his statement last Friday and in making sure that he got the sheep in before the gate was closed, he completely misjudged what I suggest is a far more important happening on the industrial front. At the very moment when he made the statement, negotiations were proceeding between the engineering employers and the trade unions represented in the Federation of Shipbuilding and Engineering Unions. I am told they were getting very near to agreement, but that the moment the Chancellor's statement was known the trade unions had to harden in their attitude. There was no settlement, and if in fact, arising from all this, trouble ensues in the engineering industry the Chancellor can have it that he is primarily responsible for the trouble which comes as a consequence.
The very sight of one who can manage to produce the kind of results which we have seen from the Chancellor coming to the Dispatch Box to tell the House that doing these things is to rid the nation of inflation would indeed be laughable, if it were not so tragic. Throughout the trade union world there is now fear and apprehension. Whereas, a short time ago, there was a serene certainty of full employment, now they are not so sure, and who can blame them? In Budget after Budget, T.U.C. advice has been repeatedly refused. An utterly essential condition of the successful introduction of new techniques—automation and the rest—is stability, security, the feeling that there is no danger of unemployment.
Take the case of men in the car industry about which my hon. Friend the Member for Birmingham, Northfield (Mr. Chapman) spoke. The car industry, more than any other, lends itself to the new automatic processes. Line production, and so on, is probably more applicable


to that industry than to any other. I should have thought that in that industry of all industries there was the need to assure the men of full employment and stability as a sort of prerequisite to getting them to agree to new techniques. But what do the Government do? They put on a credit squeeze which brings four days a week work in that industry. How can they get the men to agree to new techniques and to produce faster when they are given only four days a week?

Mr. Osborne: rose—

Mr. Lee: I cannot give way as there is not much time. I should have thought that illustration shows what great damage is being done to our industries as a whole by this sort of financial policy.
Much has been said about restrictive practices by trade unions. I wish I had the next three-quarters of an hour in which to reply to that. I wish the House would realise what damage is done by that sort of silly, stupid, nonsense. In fact, the trade unions gave up their restrictive practices of pre-war days. Those practices were enshrined in legislation and the unions were told that they could have them back whenever they asked for them, but not a single trade union has ever asked for them back. In the engineering industry before the outbreak of war in 1939 the engineers agreed to accept dilution for the period of the war. Thousands of dilutees were brought into the industry for the duration of the war and every one of them could remain if he wished.
There has never been any demand to go back to the old days prior to dilution in engineering. Isolated instances of local disputes are puffed up out of all proportion and demands for anti-union legislation are made. It begins to add up very dangerously to what we saw in the period prior to the 1927 Trade Disputes and Trade Unions Act. When we then see that the Chancellor can put up the Bank Rate to 5½ per cent. and we read the ominous words "Highest since 1931," I assure the Government that that is not the way to get co-operation from the trade union movement.
Looking back to the period from 1945 onwards, I do not claim that it produced everything that we would have liked it to do, but I do claim that it produced

the most successful machine in the way of co-operation between Government, trade unions and employers that British industry has ever seen. Now, that machine has been deliberately broken down. If the expression "Luddites" is a correct term for machine wreckers, the Government Front Bench is composed of the most destructive and costly Luddites of all time.
Despite the obvious failure of their policies, which are now shown to be completely useless, the Government persist in scrambling about and trying to get the same pieces together again. It is against this background of the failure of the Government's vaunted policies for getting Britain out of her troubles that one recalls the insults and the slurs that they used to throw at the late Sir Stafford Cripps. I saw Sir Stafford Cripps when others did not. Our relation was not merely that of a Minister and his Parliamentary Private Secretary. I give the Tories the satisfaction of telling them that they succeeded in hurting him more deeply than perhaps they knew. Tonight, as we witness the futile nonsense which is all that is left of the boasts of the party opposite when they were in opposition, perhaps Macaulay's words of Byron are apt:
It is not every day that the savage envy of aspiring dunces is gratified by the agonies of such a spirit.
I would far rather have been making a speech, as I have done in the House so many times, asking for co-operation between the trade unions, the Labour movement and the Government, but it is not possible now. Talking of the past, the Chancellor said that he hoped that faction would not now destroy what unity then achieved. He also said—I took down his words—that the collective power of the trade union leaders is considerable, but is it right to contract out of measures that are necessary? I submit that during the period when there was co-operation and confidence, when the trade unions knew that they could get a square deal from Governments, they did more than any nation has any right to expect a trade union movement to do. The unions deliberately agreed not to ask for more wages. Trade union leaders incurred all sorts of destructive comment from their own members. How some of them stood for it, I shall never know. All that is


ready again for any Government, irrespective of colour, if they will play a straight game by the trade unions.
It is not the unions who have initiated a free-for-all which causes wages to lose their values. I remember the phrase used by the right hon. Member for Woodford about money losing value. From this Box, he called it the "money cheat." Perhaps the Chancellor will ruminate upon it, for I believe that the £ is losing value at a faster pace now than ever it did under the Labour Government.
The psychological reactions of the workers are entirely changed by the Government's policy. They know that in this policy, anyone who is strong enough will grab, and apparently it is looked upon as weakness for anyone not to take all he can get. At the General Election, when told that their boasts about keeping the cost of living stable had come unstuck, the party opposite claimed, "Your wages have increased. We increased them for you." Having won an Election on that claim, what right have the Government now to tell the workers that they must not apply for wage advances?
Those of us who have a background within the trade union movement, without considering on which side of the House our party was sitting, have with pride suggested new ideas and methods in which the unions could help in effecting national recovery. We are very proud of the magnificent job of work which they have accomplished. I should have been far happier if I had been able to ask for their whole-hearted support for a Government policy designed to assist the nation in its difficulties. By their own deliberate acts this Government have divided this nation and forfeited the right to expect that any section of this party or of the workers will trust them any longer.

9.30 p.m.

Sir Ian Horobin: This is the end of the first day of the debate on a subject which is of vital importance to us all. I have listened to nearly all of it. In the observations which I shall make to the House I wish to speak in the spirit in which my right hon. Friend, the Chancellor, who opened the debate, spoke, the spirit of most of the speeches which have been made on both sides of the House since, until what I can describe

only as the lamentable and most unusual speech of the hon. Member for Newton (Mr. Lee), who has just sat down. I think it was so unusual of him, and I think that the smile on his face now is much more characteristic of him than some of the remarks that he has just made to us.
On the whole, I think, the speeches throughout the day have constituted a genuine attempt, while preserving our different approaches to this problem, to enlighten ourselves and to add to the common stock of knowledge of the subject, and to point to what can be done in a situation which nobody denies is one which cannot continue.
Let me spend a moment or two on an analysis of the situation, because there is a lot of exaggeration, and this exaggeration can be dangerous because it may cloud judgment. Nobody on these benches, certainly not I, would attempt to claim that the policies which have been carried out since 1951, in so far as they relate to limiting the inflation which we inherited, have been wholly successful. Up to the last twelve months we had been much more successful than our predecessors. But that is not enough.
We inherited an inflation, an inflation which had been going on at various rates ever since the beginning of the war. First, for several years, we reduced the speed of it by nearly half, and then, from the middle of 1953 to the middle of 1954, we virtually brought it to an end. For the twelve months between the middle of 1953 and the middle of 1954 it looked as though, in addition to all the other advantages which, in our belief, at least, we had brought, we had at last cured that condition. But at the end of 1954 and the beginning of 1955 the situation began to run away from us again.
Even so, we must destroy this ridiculous mythology which some hon. and right hon. Gentlemen opposite are trying to put across to the workers. Listening to some of them, one would think that the inflation began at the time of the autumn Budget or shortly after the last Election. Even last year, which was a thoroughly discreditable year for the Conservative Government, even last year, which was a discredit to us, we did better than the party opposite did.
It is sometimes said—it has been said in this debate—" It may be true that you


were fairly successful at the beginning." It is all too often forgotten or not admitted that we were completely successful for a year in the middle. It is sometimes said, "While it may be true that you were fairly successful at the beginning, it was all luck. The terms of trade have been so fortunate for you." [HON. MEMBERS: "Hear, hear."] I am glad of those cheers. They will be the excuse for bursting that kind of propaganda balloon which has been floating across the country. I will give the figures to the House.
How hon. and right hon. Members opposite, including the right hon. Member for Leeds, South (Mr. Gaitskell) who was once Chancellor of the Exchequer, have managed to get away with this extraordinary bluff, I have never been able to understand. Let us exclude 1951, because we all admit that that was an entirely exceptional year. I will concede that to hon. Members opposite. I am being kind to them. The year 1952 was the worst year there has ever been. The terms of trade stood at 106, and we all know that the higher the figure the worse the terms are. That was the figure in the first full year of office of the Conservative Government. It is a figure which had never been approached before and has never been approached since.
Since 1952, and all the time that we on this side of the House have been in office, the terms of trade have varied between 100 and 101. What were the terms of trade when hon. and right hon. Members opposite were in office? In 1949, one of their good vintage crises years, were they higher than 100? Were they more unlucky than us? No, the terms of trade were 92. In 1947, another vintage Socialist crises year, were the terms of trade more unfortunate for them? Not a bit of it. They were as low as 92, and it was not a question of putting a penny on bread. The party opposite was rationing bread for the first time in history.

Mr. George Lawson: rose—

Sir I. Horobin: The hon. Member's right hon. Friend would not give way earlier, and I do not see why I should do so now.

Mr. Lawson: Will the hon. Member tell us what the terms of trade were, on average, in 1951?

Sir I. Horobin: They were 113. I am conceding the hon. Member that. We admit that that year was totally exceptional.
It has been suggested that in all the other years we on this side of the House have been very fortunate. In fact, we have been unfortunate.
What has happened is that in 1955, on top of a situation which was barely in balance, and, indeed, in which there was still a certain inflation, and on top of a capital programme already fully extended, we piled a long overdue and highly desirable capital programme in private industry, for which no room had been made. That capital programme of about £200 million of expenditure in private industry—which we all agree must be carried out if our competitive position is to continue—was the main cause of inflation in 1955.
Here, I come to a figure which I can only offer as a guess. So far in the debate, nobody has attempted to offer this figure, which is the most important of all. I offer it because I hope that the Chancellor or some other Government spokesman will be able to correct it later if I am wildly inaccurate. My own guess, and it is no more than an informed guess in the light of my interpretation of the present state of our inflation, is that the measure of the inflationary strain with which we have to deal at the moment is about £300 million a year. It is not very much more, and certainly not very much less.
If that figure be about correct, it conditions what are the proper methods of dealing with this inflation. If we are as near to equilibrium as all that, there can be no possible excuse for going back to all the discredited measures which are suggested by some hon. Members, and giving up the whole attempt to revert to a free economy. That figure is difficult to arrive at, and again I express the hope that some later Government speaker may be able to help us because there is a good deal of what I can only call confusion in the figures offered to us when we are told about cuts. Sometimes we are told about cuts back from a plan for this coming year, sometimes about a cut in present expenditure. Therefore, we cannot add up the figures or estimate whether they are correct.
What we are concerned with is the actual reduction which has to be made in the demand on resources, not the reduction which is to be made in a possible plan which might have been wildly too large. We have not been given those figures. I know it is difficult to give them because statistics are still very incomplete in this country. However, I put it as my first contribution to this discussion that the order of magnitude with which we are concerned is about £300 million a year. If that be so, I come now to the next point.
A point not always sufficiently considered in these debates is the almost incredible extent of the success of the measures of one kind and another taken in reverting to the free economy since 1951. Is it appreciated throughout the House or outside that the increase in the real annual income of this country in real things between when we came into this office and this year is of the order of an increase of £2,000 million a year? And it is out of that colossal real increase in wealth available each year that not only higher real wages, but higher real profits, that the improvement in the social services and the rest have been paid.
Our real national income is still increasing by about £500 million every year. If we can only keep our present full employment, or something near to it, about £500 million extra every year is becoming available for us either to consume or to save or to export. Put those two figures together—and if I am wrong it is urgent that I should be corrected tomorrow—if the inflationary pressure is about £300 million a year, if the real new wealth coming forward out of our united efforts is between £500 million and £600 million, all we need to do to get out of this trouble is to hold back our demands—all of us, for wages, profits, investment—on real wealth—[Laughter.] This is not a laughing matter—all that is required in the country is for us to hold back our demands for increases in real wealth for between six months and nine months in order to allow production to catch up, and the mere surge of this huge boom, which we have been experiencing since 1951, will carry us forward to safety.
If that analysis of the position is right, or anywhere near it, it would be more than depressing, it would be a disgrace, to all of us on both sides of the House and on both sides of industry if this great industrial nation were to go on year after year perhaps just out of the red, perhaps not seriously in the red, but always in danger of getting down to that minimum in its reserves which puts in peril not only the advance in our standards but our very power to preserve our position in the world.
If I am right and the margin is as narrow as that, we need not make great cuts in our standard of living, need not make great cuts back in our investment, but simply hold back for six months to a year the increased demands that we make, surely it should not be beyond our power to solve such a problem.
So far in the debate nobody else has attempted to put any alternative figures and, after all, we must discuss these matters in terms of figures, however wide are the margins of error. For my part, in the light of what I have said, I agree with the Chancellor's measures, both in respect of what they contain and what they omit. If we are as near as I have suggested, I cannot see any justification for import controls, building licences, and so on. What my right hon. Friend is doing seems to me well chosen. In particular, I have always been in favour of further steps in the restriction of hire purchase. I speak as a social worker in saying that the extent of hire purchase in this country is a great social problem which was well due for consideration, quite apart from the part which its restriction can play in dealing with inflation.
I also feel that the Chancellor has served us all well, in taking the steps which he has done, in his timing—[Interruption.] If hon. Members opposite cannot even attempt for a few minutes to follow what I think is a serious contribution to an economic debate, I will say this to them. In my humble opinion far more people would be likely to vote for us if they thought that we really meant business, and I think that we should have done even better if these measures had been taken earlier.
No one can accuse me of shirking this kind of thing. I am glad to think that some hon. Members would give me that credit in view of the way in which I


handled our cotton problems in Lancashire. But let me get back to the economics of this problem. I will leave others to indulge in easier and more amusing political back-chat.
I was saying that I am glad that the Chancellor is dealing with these problems now and not concentrating his proposals on the Budget, because I am firmly convinced that this problem is not primarily a budgetary problem. I have never subscribed to the doctrine of Sir Stafford Cripps that the Budget is a major or, indeed, a successful weapon with which to fight inflation at a time when taxation is very high. Indeed, I will go further, and perhaps raise another ironic cheer, by saying that I think that the good really done last autumn was done outside the Budget.
I think that if, in the Budget, the Chancellor is as successful as I hope, and as firm as he has shown himself to be in his non-Budget measures, he can apply himself to quite a different problem—the major problem which he has to deal with, namely, that of encouraging saving. Far from hoping that he will look forward to new forms of taxation and imposing new penalties on anyone, I hope that he will apply himself, in his Budget, to finding some ways and means of encouraging savings.
On this matter of savings I will remind the House of one further figure which ought to be in our minds. Goodness knows what the inflationary pressure would have been now if it had not been for the dramatic and almost unbelievable upsurge of private savings which took place as soon as the present Government took office. Is it always remembered that private savings since 1951 leapt up by nearly £600 million a year, and have stood at that high level ever since? If we fell back to the measure of private savings in 1949–50 we should be dealing with an inflationary gap not of £300 million but one of nearer £1,000 million.
Good as this improvement in private savings is, it is not good enough. I hope that the Chancellor, in his Budget, will direct himself not, as I say, primarily to ways by which he can put extra taxation on everyone, because I do not think that that would serve his purpose. The budgetary ways which he has applied already are the ways to cure inflation.

In his Budget he should concentrate on the problem on encouraging savings.
There is one big omission from the Chancellor's proposals to which I must devote a couple of sentences. It is, in my opinion, one of the most important weapons in his armoury. I frankly do not understand why this weapon has been allowed to rust unused for so long. What can be the justification for putting off much longer the conversion into medium-dated securities of the intolerable burden of Treasury bills? There is not now much advantage even from the point of view of the interest that we have to pay upon them.
How can we possibly stop inflation when, year after year, the Government are, in effect, building houses, roads, factories and schools, not with the real savings of the people, but upon purely inflationary Treasury bills? I very much hope that before very long we shall hear that the Chancellor is converting a substantial amount of the outstanding Treasury bills, thereby reducing the liquidity of the banks and automatically putting them into a position of not being able to lend to all and sundry. If that were done, no directives—which they hate as much as anyone else—need be issued.
Last year, in taxation, the Government took about £430 million budget surplus, and borrowed more than it repaid—another £220 million—making £650 million in all—and they lent the whole lot, below the line, to nationalised industries, local authorities and the rest. How anybody expects inflation ever to stop under those circumstances is beyond my comprehension.
A good deal has been said about the problem of the nationalised industries which is instinct with a great deal of feeling. I think—and I am fortified in my view by my short membership of the two committees dealing with nationalised industries, upon which sat Members of both sides of the House—that it is time for all hon. Members to set aside altogether the question whether these industries should have been nationalised, and any arguments whether any one should at any time be denationalised, and simply take them as they are—enormous, self-contained, almost syndicalised empires, controlled effectively by nobody; able, from the best of motives, to make nonsense of any Government's financial programme.
Is it not really time that we devoted the best brains on both sides of the House to the really vital problems—including especially the problem of building into the nationalised industries more effective financial control, so that we no longer have the present position in which, as the Herbert Report on the electricity industry pointed out so well, even the Central Electricity Authority itself is not in a position to exercise control, let alone the Minister when the problem comes to him?
If the trade unions and the Labour movement are completely determined to commit suicide—which I am sure they are not—nobody can stop them. It is useless and very wrong for hon. Members opposite to minimise the damage done by the dock strike last year, for instance. It was tragic. If—which heaven forbid—some even more serious dispute in a great industry, such as the engineering industry, broke out this year or next year and continued for any length of time, the results might be too serious to contemplate.
Certainly, nothing will be said by me to lead any honest trade union official concerned with the living standards of his people to feel—as was suggested by the hon. Member for Newton—that the workers were not getting a square deal and must embark upon industrial measures against the democratically-elected Government—[HON. MEMBERS: "Nonsense."] The hon. Member got very very near it. It would be a great pity if anything of that sort occurred. There is no need for it at all.
There is no need for these suggestions that we are on the verge of a slump and that we can go back to widespread, long-continued unemployment. There has never been an inflation which we could proceed to stop with greater safety than this one. There is a whole mountain of ready-made capital schemes calling out to be done and that could be put into action overnight, if there were any danger. We could have an emergency Budget every three months to reduce taxation, if hon. Members opposite wished, if there

was any danger of a slump. It is ridiculous, at the moment when we are trying to deal with this grave, continuing danger of inflation, for us to hamstring ourselves at the start by thinking of dangers which are not really present and which, if they should arise, could be handled by any Government without difficulty long before they became serious.
Behind all this discussion of techniques and economics lies a more fundamental choice. We have a Welfare State, and those of us who deal with it at close quarters know that it has its dangers. Hon. Members will know that I have specialised for many years mainly in dealing with young people in one of the great industrial areas of the country. There is no doubt that many of the younger generation have accepted and absorbed a view of the Welfare State. They have long passed the stage at which they play at their work; they play at their play. They want to be carried on to the football pitch and be wheeled about when they get there. I deal with a good many of these people and that is true, but it is not the whole truth.
One sees young people flocking into the grammar schools, the evening institutes and the technical institutes, reaching out for the new skills and new knowledge of the electronic age. They know that they have in front of them possibilities that their fathers never knew, of a much higher standard of life. Good luck to them.
That is the approach that we have to encourage in our people. On this side of the House we believe in freedom. We believe in incentives and in private ownership and private initiative. Nothing that has been said on the Opposition benches has convinced me or any of my colleagues that we ought to go back to the endless frustrations of control. The assumption that people in a Government Department know better than I do what I ought to do with my own money is wrong. Anyhow, that is our story, and we are sticking to it.

Debate adjourned.—[Mr. E. Wakefield.]

Debate to be resumed Tomorrow.

Orders of the Day — HOUSE OF COMMONS DISQUALIFICATION BILL

Order for Committee read and discharged:

Bill committed to a Select Committee:

Major Anstruther-Gray, Mr. Ronald Bell, Mr. Bowles. Mr. Clement Davies, Mr. Deedes, Mr. Doughty, Mr. Ede, Mr. Eric Fletcher, Sir Hugh Lucas-Tooth, Mr. Mitchison, Mr. Phelim O'Neill, Mr. Parker. Mr. Pickthorn. Sir Patrick Spens, Mr. Geoffrey Stevens, and Mr. John Taylor:

Power to send for persons, papers and records:

Five to be the Quorum.—[Mr. E. Wakefield.]

Instruction to the Committee that they do consider the Amendments standing on the Notice Paper in the name of Mr. George Wigg.—[Mr. Wigg.]

Orders of the Day — NATIONAL SERVICE (SOLDIER'S DEATH)

Motion made, and Question proposed, That this House do now adjourn.—[Mr. E. Wakefield.]

10.0 p.m.

Mr. Beresford Craddock: The case to which I wish to draw attention is that of the late Lance-Bombardier Albert Dillingham, whose home was at 110, Long Lane, Ashford, Middlesex—a young National Serviceman who, unhappily, died in Germany while on duty as the result of a road accident.
I had protracted correspondence with my hon. Friend the Under-Secretary of State for War, who dealt with the matter in his usual sympathetic and courteous manner. I must say, however, that there are many features of this unfortunate business which, in my view, merit further investigation because, as I hope to show, the Army authorities handled this matter in, to say the least of it, a most unsatisfactory way, causing much additional distress and anxiety to the young man's parents. I realise that nothing can now be done for this young man, who died in the service of his country. I hope, however, that as a result of this case other parents and relatives who may in future have to face similar regrettable circumstances may be spared additional grief and anguish.
Lance-Bombardier Dillingham was doing his National Service and was stationed in Germany. On 29th August last, whilst he was on duty, the truck in which he was travelling skidded on the wet road and overturned and the Lance-Bombardier was seriously injured. The accident occurred at about 6.30 p.m. The young man was admitted to the City Hospital, OsnabrÜck, and placed on the dangerously ill list. His father was notified by telegram on the following day, 30th August, the time of despatch of the telegram being 11.40 a.m. Unfortunately, Lance-Bombardier Dillingham died on 30th August at 11 a.m.—forty minutes before the telegram notifying his serious condition had been despatched. The telegram notifying his death was despatched from Sidcup, Kent at 3.45 p.m., less than five hours after the time of death.
The father requested that his son's body should be brought home for burial and was informed by the authorities that this would cost £120 by sea or between £40 to £70 by air, plus an additional £12 10s. for the coffin. The body was brought back to England and arrangements were made for the funeral to take place on Monday, 5th September. No death certificate was sent with the coffin, and on arrival in England an inquest had to be held so that the father could identify his son, and a post-mortem was carried out. These proceedings resulted in the postponement of the funeral from the 5th to the 7th September.
The death certificate was not received from the Army authorities until fifteen days after the death of Lance-Bombardier Dillingham, and the inquest, which had been adjourned on 5th September, was resumed on 15th October. The Army certificate stated that the cause of death was a perforated duodenal ulcer causing peritonitis. At the resumed inquest this was characterised by the Deputy West Middlesex Coroner, Dr. Gorsky, as nonsense. The post-mortem examination in this country was carried out by the well-known pathologist Dr. William Dunne-Evans, who declared that there was no evidence whatsoever of a perforated duodenal ulcer and gave the cause of death as a fractured skull. Dr. Dunne-Evans stated in evidence that he was quite satisfied with his finding, and the Coroner advised the jury to accept this as the true cause of death. Those are the facts.
I now wish to address certain specific questions to my hon. Friend. First, is my hon. Friend satisfied that the accident was not caused by excessive speed? Mr. Dillingham, the father of the young man, has been in touch with a German citizen who claims to have witnessed the accident, and this person alleges that the truck was being driven very fast. I understand that this particular type of lorry in which the unfortunate young man was travelling is called a "Four-by-four" and is restricted to a maximum speed of 20 m.p.h. The fact that the vehicle skidded so violently, overturned and rolled down the bank, in my view, indicates excessive speed. I am, therefore, not satisfied with the inquiry and think that a further investigation is called for.
My second question is this, and it follows on naturally from my first point. The findings of the post-mortem examination in Germany make me even more suspicious. Like the coroner, I prefer to accept the pathologist's findings in this country. It seems very strange that the cause of death should be certified by the Army doctors as a perforated duodenal ulcer which normally one would assume to be death by natural causes and nothing to do with the accident. It looks to me—I hope I am not being unfair—as if this was a deliberate attempt to hide something and rule out any question of negligence or dangerous driving.
In my opinion, further inquiry should be made as to how such an extraordinary mistake in diagnosis could be made by a competent medical officer. Moreover, I would draw particular attention to the fact that no mention in the Army death certificate was made of a fractured skull. I feel sure that my hon. Friend must regard this as a grave matter which merits the fullest investigation.
I now turn to the question of the two telegrams to the parents. The accident occurred, as I have said, at 6.30 p.m. Yet the telegram notifying the parents that the young man had been placed on the danger list was not dispatched until 11.40 a.m. the next day—a delay of some seventeen hours. The telegram notifying death was dispatched about four and a half hours after the event. Why the discrepancy? Why could the parents not have been notified the same evening, namely, the evening of 29th August, that their son had been placed on the dangerously ill list? If that had been done, arrangements could have been made to take the parents over to Germany by air to see their son, if they so desired.
I must say that I think it absolutely shocking that the death certificate from the Army authorities did not accompany the body when sent to England and was not forthcoming until 15 days after the death. I have described what happened as a result of this negligence and the added distress caused to the young man's father and mother, and I hope that whoever was responsible has been severely dealt with.
The father, Mr. Dillingham, expressed surprise that the coffin was not draped with the Union Jack on arrival in this


country. This may seem a small point, but I submit that it is nevertheless a worthy point. I appreciate that there might be difficulties in doing it, but, after all, this young man died in the service of his country just as if he had died on the field of battle, and I suggest that such a gesture would have been an honourable tribute in an honourable service.
Then there is the question of bringing the body to this country for interment. I understand that Germany is classified as a home station. Why, then, should the father have to pay such a large sum? I see no reason that the conditions which apply to those serving further afield should apply to Germany which, as I understand, is classified as a home station, and which we all know is not very far from England.
It may well be that if negligence on the part of the driver of the truck had been found, a claim for compensation by the young man's father might lie. I do not propose to pursue that aspect of the matter. I think I have said enough, however, to show that this case has been very badly handled by the Army authorities, resulting in a great deal of additional pain and sorrow to the late Lance-Bombardier Dillingham's parents.
No payment of money can compensate for their sad loss, but, as an act of grace and in view of the peculiar and, I think I am justified in saying, special circumstances, I feel that the Army authorities should not call upon the father to meet the expenses of repatriation. Apart from other considerations, I might point out that Mr. Dillingham senior gave loyal service in the Army during the last war. He is a lorry driver in civilian life earning £8 per week and he can ill afford this heavy expense. I bone my hon. Friend will be good enough to give special consideration to the plea which I make in that connection.
Finally, there is a broader and more general aspect of the case. As we all know, there is today a good deal of criticism about National Service. I should have thought that the Army authorities would take particular care to see that nothing is done which may give rise to further criticism. In the case of the late Lance-Bombardier R. A. Dillingham, I regret to say that in my opinion the authorities have failed to do so. I trust that my hon. Friend will agree and

will be able to assure me this evening that he has so informed those in authority who were responsible.

10.14 p.m.

The Under-Secretary of State for War (Mr. Fitzroy Maclean): I should like to begin by thanking my hon. Friend the Member for Spelthorne (Mr. Beresford Craddock) for the opportunity which he has given me of clearing up the various points which he has raised, and I hope that by the time I have finished I shall be able to convince him and the House that, with one notable exception, everything possible has been done by the Army authorities in this unfortunate case. My hon. Friend has recounted the circumstances in which the late Lance-Bombardier Dillingham lost his life. I should like to take this opportunity of conveying a message of sincere sympathy to his parents.
My hon. Friend has raised various points, and I should like to deal with them in order. First of all, there is the question of notification. My hon. Friend has asked why notification of the accident and of their son's injury was not conveyed to his parents sooner. The reason for that was that the message sent after the doctor had examined Lance-Bombardier Dillingham did not reach this country until late the same evening. By then, the General Post Office had ceased to deliver telegrams, and hon. Members will be aware that telegrams are not delivered between 10 o'clock at night and 7 o'clock in the morning.
The message was not passed on by telephone, because as a general practice we do not consider that it is advisable to notify casualties to the next-of-kin by telephone late at night. Our experience has shown that to do so causes distress, and it is, therefore, our policy not to do so. With certain exceptions, such as soldiers gravely ill in this country, our policy is to wait until the following morning and send a telegram.
In this case, my hon. Friend said that the telegram was not dispatched until 11.45 the next morning. My information—and I will look further into this point—is that it was dispatched at 10 o'clock on the morning of 30th August. That was the telegram informing Mr. Dillingham that his son had been placed on the "dangerously ill" list. A further signal


was received from Germany early that afternoon reporting Dillingham's death, and a telegram to that effect was sent to Mr. Dillingham at 3.30 p.m., followed the same evening by the usual letter of confirmation.
In these circumstances, I think it will be seen that there was no error in this case. It is our practice, and hon. Members may agree or disagree. Our experience has shown that it is the best way not to deliver telegrams at night and not to make telephone calls late at night to the next-of-kin.
I next come to the question of the certificate of the cause of death, and here I would distinguish between the two documents—the ordinary death certificate and the certificate of the cause of death. Mr. Dillingham decided to have his son's body brought home at his own expense. B.A.O.R. Headquarters have issued a general routine order which lays down that in such cases the following documents should accompany the coffin; first, the certificate of the cause of death; secondly, personal particulars, such as the full name, place and date of birth, occupation, and place of death; and, finally, a Customs certificate.
In the case of Lance-Bombadier Dillingham, these instructions were not complied with, and the certificate of the cause of death was not included in the documents which accompanied the body. That was a serious mistake on the part of the unit concerned. I can assure my hon. Friend that its attention has been drawn to it. In my view there is no excuse for that mistake. I apologised to my hon. Friend as long ago as 24th November in my letter to him of that date, and I should like now to repeat my apology for that mistake. I am afraid that it is bound to have caused unnecessary distress to the bereaved parents. It also made necessary an inquest and delayed the burial considerably.
As to the ordinary death certificate, it is not the practice of the Army to issue a death certificate unless it is asked for. As soon as it was asked for, on 8th September, two copies were sent to Mr. Dillingham, for insurance purposes. There again there was no undue delay. We follow the practice which is usual in civil life; we do not send a death certificate unless one is applied for.
I should like to try to clear up the point about the cause of death. A post-mortem on Lance-Bombardier Dillingham was held on 31st August. It was held by an Army pathologist in the presence of the assistant director of pathology, who is the senior British pathologist in Germany. The cause of death was found to be traumatic cerebral haemorrhage—that means bleeding into the brain due to injury—aggravated by peritonitis due to perforation of a duodenal ulcer. The skull was not fractured. That was the finding of the pathologist who examined the body. I think it must be recognised that that was a serious medical opinion—I have quoted the authority—of an Army pathologist supported by the assistant director of pathology. That opinion differs from the opinon given by doctors in this country.
The question of whether or not the skull was fractured is one which in this conflict of evidence I am certainly not competent to decide, but my advice from my medical advisers is that the skull was not fractured. As to the perforation of the duodenum, I understand that the coroner's pathologist said that he could find no evidence of that, but I should point out that part of the organs concerned had been removed for further examination in Germany and, therefore, were not available at the second post-mortem.
The important thing to remember is that everybody must be agreed that this soldier's death was due to injuries received in the motor accident. It has certainly never been suggested by the Army medical authorities, and I cannot believe it would be suggested by the civil authorities, that it was due to anything else.
My hon. Friend has raised the question of repatriation of bodies. As there are a lot of other points to be discussed and there is not much time left to discuss them, I will just say that our decision not to repatriate the bodies of soldiers who lose their lives abroad is a policy of long standing. It rests on the tradition that soldiers who die overseas in the service of their country should be buried by their comrades near the place of death. They are given dignified and impressive funerals and their graves are carefully tended in perpetuity.
If my hon. Friend would like to pursue this matter in greater detail, I would refer


him to the Adjournment debate in this House on 5th April last year, when we went into the matter in some detail. I am convinced that that is the right policy. We do at the same time make arrangements for parents or relatives who wish to repatriate the bodies of soldiers, but in those cases we do not feel that the expense should be borne by the taxpayer. Therefore, it is done as a private arrangement, and we do anything we can to help.
My hon. Friend suggested that Germany is regarded as a home station and should not, therefore, for this purpose be treated as an overseas station; but the fact remains that Germany is regarded as an overseas posting for all purposes except one. The one exception is that, for Regular soldiers, service in Germany does not count towards an overseas tour. The principal reason for this is to give soldiers serving there the great benefit of being able to take their leave in the United Kingdom and to be brought home for that purpose without charge. For all other purposes, however, Germany is regarded as an overseas posting. Therefore, we could not without unfairness make an exception for soldiers in Germany and refuse the same benefits to soldiers who die, for instance, in Malta or Gibraltar, or other foreign stations not so much further away.
My hon. Friend mentioned the Union Jack. It is perhaps unfortunate that the Union Jack was removed from the coffin before it was placed in the aeroplane. The reason was that it was felt that the parents should be spared the trouble of packing it up and sending it back again.
As to the speed at which the truck was driven, I have myself looked at the proceedings at the court of inquiry. There was no conflict of evidence on this point. The driver, the surviving passengers, the expert witnesses and, finally, the German civilian, who, I am informed, was the only other person present, all agreed that there was no excessive speed. It is generally agreed that the speed was between 20 and 25 miles an hour. The accident took place because the road was wet. It was a straightforward case of a skid on a wet road.
My hon. Friend has raised the question of compensation. The matter has already been referred to the Claims Commission, which, I understand, has replied to Mr. Dillingham saying that no claim is admissible; but the Commission has added that as the soldier's death was attributable to service for the purpose of the Royal Warrant relating to the disablement or death of soldiers, it is open to Mr. Dillingham to approach the Ministry of Pensions and National Insurance for advice as to the possibility of his entitlement to a pension.
I should like to conclude by saying once again how much I regret the very unfortunate error that occurred in the matter of the certificate of the cause of death.

The Question having been proposed at Ten o'clock and the Debate having continued for half an hour, Mr. SPEAKER adjourned the House without Question put, pursuant to the Standing Order.

Adjourned at half-past Ten o'clock.